USD/CAD Forecast July 10-14

The Canadian dollar recorded strong gains for a second straight week, as USD/CAD dropped 110 points. The pair closed at 1.2860, its lowest weekly close since June 2016. This week’s key event is the BoC Rate Statement. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

Canadian employment data sparkled for a second straight week, as the economy added 45.3 thousand jobs, well above expectations. As well, the unemployment rate edged lower to 6.5%, down from 6.6%. In the US, the Federal Reserve minutes didn’t do much to raise investor confidence, unlike the upbeat rate statement in June. The minutes indicated that policymakers were divided over the timing of starting to reduce the Fed’s balance sheet, and members also expressed concerns about low inflation. US Nonfarm Payrolls rebounded in June, easily beating expectations.

Updates:

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

Housing Starts: Tuesday, 12:15. The indicator provides a snapshot of the strength of the housing sector. In June, the indicator dipped below the 200 thousand level, coming in at 195 thousand. This was short of the forecast of 205 thousand and marked a 6-month low.

BoC Monetary Policy Report: Wednesday, 14:00. This quarterly release details the bank’s view of economic conditions and inflation, and can provide clues regarding future monetary policy. It will be followed by a BoC press conference.

BoC Rate Statement: Wednesday, 14:00. The BoC is expected to raise rates a quarter-point to 0.75%. This would be the first rate hike since July 2015 and could boost the Canadian dollar.

NHPI: Thursday, 12:30. The housing inflation index improved to 0.8% in May, its strongest gain since 2007. The estimate for June stands at 0.2%.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.2976 and quickly climbed to a high of 1.3014, testing resistance at 1.2980 (discussed last week). The pair recorded sharp losses at the end of the week, falling to 1.2859. The pair closed the week at 1.2860.