- 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:
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:
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.
-636858222497454315.png)
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.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD retreats below 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated below 1.0700. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 as USD rebounds
GBP/USD declined below 1.2500 and erased the majority of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold drops below $2,320 as US yields shoot higher
Gold lost its traction and turned negative on the day below $2,320 in the American session on Thursday. The benchmark 10-year US Treasury bond yield is up more than 1% on the day above 4.7% after US GDP report, weighing on XAU/USD.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.