USD/CAD Forecast Oct. 31 – Nov. 4

Kenny Fisher MarketPulse

The Canadian dollar posted slight losses last week, closing just under the 1.34 line. This marked its lowest weekly close since March. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

In the US, durable goods orders were mixed. Advance GDP beat expectations at 2.9%, but the internals were mixed. UoM Consumer Sentiment dropped to its lowest level since September 2015 and missed expectations. There were no major releases out of Canada last week.

USD/CAD daily graph with support and resistance lines on it.

RMPI: Monday, 12:30. RMPI measures inflation in raw materials purchased by manufacturers. The index has posted two straight declines, as Canada continues to struggle with low inflation levels.
GDP: Tuesday, 12:30. GDP is one of the most important economic indicators and an unexpected reading can have a sharp effect on the movement of USD/CAD. The monthly indicator posted a gain of 0.5% in August, but is expected to drop to 0.2% in the September report.
RBC Manufacturing PMI: Tuesday, 13:30. This minor indicator continues to post readings just above the 50-point level, indicative of a stagnant manufacturing sector. In September, the index dipped to 50.3 points, well short of the estimate of 51.5 points.
BoC Governor Stephen Poloz Speaks: Tuesday, 16:00. Poloz will speak at an event in Vancouver. The markets will be looking for any clues regarding future BoC monetary policy.
BOC Senior Deputy Governor Carolyn Wilkins Speaks: Wednesday, 17:30. Wilkins will deliver remarks at an event in Toronto.
BoC Governor Stephen Poloz Speaks: Friday, 00:35. Poloz will deliver remarks in Oshawa. A speech that is more hawkish than expected is bullish for the Canadian dollar.
Employment Rate: Friday, 12:30. This key indicator should be treated as a market-mover. The economy added 67.2 thousand jobs in September, crushing the forecast of 8.5 thousand. However, the markets are bracing for a sharp downturn in October, with an estimate of -10.0 thousand. The unemployment rate is expected to remain unchanged at 7.0%.
Trade Balance: Friday, 12:30. Trade Balance is closely monitored, as it is linked to currency demand. Canada’s trade deficit narrowed to C$1.9 billion in August, smaller than the estimate of a deficit of C$2.5 billion. The positive trend is expected to continue in September, with the deficit expected to drop to C$1.7 billion.
Ivey PMI: Tuesday, 14:00. Ivey PMI tends to show significant volatility from month to month. The indicator jumped to 58.4 points in September, well above the forecast of 53.0 points.

USD/CAD opened the week at 1.3351 and quickly dropped to a low of 1.3275. USD/CAD then reversed directions and posted small gains over the course of the week. The pair touched a high of 1.3433 as resistance remained firm at 1.3457. USD/CAD rebounded late in the week, climbing to a high of 1.3355. The pair closed the week at 1.3391.

Technical lines, from top to bottom

We start with resistance at 1.3813. This line was a cushion in January and February.

1.3672 is next.

1.3551 has provided resistance since March.

1.3457 was a cap in September 2015. It held firm in resistance last week.

1.3353 is a weak support line. It could see action early next week.

1.3219 was a cap in April.

1.3081 is the next support line.

1.2990 has held firm since early September. It is the final support level for now.

I remain bullish on USD/CAD

A weak Canadian GDP could add to the loonie’s woes next week. As well, positive sentiment towards a Fed rate hike in December is bullish for the US dollar.

Interested in USDCAD technicals? Check out the key levels

1. R3 1.3453
2. R2 1.3441
3. R1 1.3424
PP 1.3412
1. S1 1.3395
2. S2 1.3382
3. S3 1.3365

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.