USD/CAD posted moderate losses last week and dropped below the 1.27 level. There are four events in the upcoming week, including inflation and retail sales. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.
- Manufacturing Sales: Monday, 13:30. The indicator came in at -0.6% in November, its first decline since August. The December forecast stands at 0.2%.
- Inflation Report: Wednesday, 13:30. Headlines inflation disappointed with a reading of -0.2% in December, missing the forecast of 1.0%. Trimmed CPI, which excludes the most volatile items in the headline CPI, ticked lower to 1.6%, down from 1.7%.
- ADP Non-Farm Employment Change: Thursday, 13:30. This employment indicator has resumed its losing ways, with a decline of 28.8 thousand in January. Will we see an improvement in February?
- Retail Sales: Friday, 13:30. Retail sales showed a strong upward move in November, rising from 0.4% to 1.3%. Core retail sales sparkled, rising from 0.0% to 2.1%.
Technical lines from top to bottom:
We start with resistance at 1.3074.
1.2977 is protecting the symbolic 1.30 level.
1.2916 (mentioned last week) was last tested in resistance in mid-December.
1.2782 is next.
1.2684 is an immediate support level.
1.2587 is next.
1.2459 has held in support since February 2018.
1.2329 is the final support level for now.
I am bullish on USD/CAD
Canada’s economic growth remains weaker than that of the US, as the country has imposed lockdowns to deal with the Covid-19 pandemic. As well, the BoC has signaled that it remains concerned about the high value of the Canadian dollar.