USD/CAD Forecast: Crude helps CAD keep calm, retail sales eyed


  • USD/CAD slightly dropped amid higher oil prices and hopes for a US-Chinese trade deal.
  • Canadian retail sales stand out, and oil remains of high importance.
  • The technical picture is perfectly balanced for the pair.

This was the week: Rising oil, hopes for a deal

The Canadian calendar was light and allowed the price of petrol to take center stage. There were no dramatic movements, but the black gold extended its gains, boosting the C$. Reports that OPEC and its allies are fulfilling their pledges to cut production and the ongoing political crisis in Venezuela kept oil bid. 

Another factor boosting the loonie and weighing on the US Dollar came from optimism about trade talks between the US and China. Reports that the trade truce may be extended by an additional 60 days encouraged markets. China also contributed with a piece of good news: exports and imports both rose in January.

The greenback did gain against major currencies amid their issues but dropped against commodity currencies that advanced alongside the better mood in stocks.

US core inflation beat expectations with 2.2% YoY and Fed officials were mixed in their views.

Canadian events: Retail sales and rising oil

The ADP Non-Farm Payrolls report for January is of interest as another tracker of the labor market, and it will likely be upbeat after the official figure beat expectations. Wholesale sales are also of interest. 

The primary event is on Friday. Canadian retail sales have probably bounced back in December after a disappointing November. Back in the month of Black Friday, retail sales fell by 0.9%, and the figure excluding autos did not excel either: a retreat of 0.6%. The data is critical for the Q4 GDP due in the following week.

Earlier in the week, oil may continue playing a crucial role. Can crude continue climbing? Many doubt the potential for further gains as the global slowdown may weigh on demand. 

Here is the Canadian calendar for this week:

Canadian calendar events February 18 22 2019

US events: Fed focus again 

Apart from ongoing trade talks, the FOMC Meeting Minutes stand out. They are set to provide more detail on the January decision in which the Fed took a dovish twist. We may learn more about the members' inclinations to pause the rate hike cycle and also respond to markets and open the door to changes in the balance sheet reduction program. It will be interesting to hear if there were calls for a rate cut. 

On Thursday, we will get the belated durable goods orders data for December, which feeds into the GDP data in the following week.

Here are the critical American events from the forex calendar

US macro events February 18 22 2019

USD/CAD Technical Analysis

Dollar/CAD is quite balanced after a week of trading in a range, albeit a broad one. The Relative Strength Index is balanced and Momentum is nowhere to see. The pair trades between the 50 and 200 Simple Moving Averages. All in all, the technical picture is quite neutral. 

Resistance awaits at 1.3330 which capped the pair early in February and provided support in early December. 1.3375 was the high point in January and almost perfectly converges with the 50-SMA. 1.3425 was a swing low in December and works as a cap on USD/CAD. 1.3580 and 1.3660 are next.

Some support awaits at 1.3230 which provided support in mid-January and also in mid-February. The week's low of 1.3200 is also a round number and serves as another line of defense after 1.3200. 1.3135 was a critical support line in November and is followed by 1.3070, which is the 2019 low. 1.2970 dates back to the autumn.

USD CAD technical daily chart February 18 22 2019

USD/CAD Sentiment

While the loonie showed a lot of resilience in the face of a stronger greenback, this may not last for too long. It will need an upbeat retail sales number to hold onto its ground amid a global slowdown.

The FXStreet forex poll of experts shows a bullish trend in the short term, sideways in the medium term, and bearish afterward. The targets have all been downgraded in the past week.

Dollar CAD fx poll experts February 18 22 2019

Related Forecasts

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD modestly up for the day, still below 1.0900

The EUR/USD pair is trading marginally higher at the end of Wednesday, as panic eased. Nevertheless, concerns about the coronavirus possible effects on economic growth keep investors in cautious mode.

EUR/USD News

AUD/USD at fresh multi-year lows and at risk of falling further

The Aussie remains among the weakest currencies in the FX sphere, amid Australian economic tights with China. AUD/USD trading at an over one-decade low in the 0.6550 price zone.

AUD/USD News

Crypto Today: Bitcoin bears force devastating break of $9000

BTC/USD is currently trading at $8740 (-6.50%), the bears have smashed the big $9000 mark to the downside. 

Read more

Gold surrenders early gains, refreshes session low around $1630 region

Gold surrendered its early modest gains and has now drifted into the negative territory, refreshing session lows around the $1634-335 region.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors

Cryptocurrencies

Signatures