The Canadian dollar weakened during the week, but then recovered and ended the week unchanged. USD/CAD closed the week at 1.3084. This week’s key events are the Overnight Rate and GDP. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.

US numbers were generally positive and the FOMC’s minutes were slightly dovish but still upbeat about the economy. However, the Trump administration is yet to outline its economic agenda. In Canada, consumer indicators were mixed. Retail Sales reports disappointed with declines. On a bright note, CPI jumped to 0.9%, well above expectations.

Updates:

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

1. RMPI: Tuesday, 13:30. This indicator measures inflation in the manufacturing sector. The index rebounded in December with a strong gain of 6.5%. This easily beat the forecast of 2.9%.
2. Current Account: Wednesday, 13:30. Canada’s current account deficit narrowed to C$18.3 billion in Q3, but this was higher than the forecast of C$16.4 billion. Will the deficit continue to fall in the Q4 report?
3. RBC Manufacturing PMI: Wednesday, 14:30. The PMI improved to 53.5 points in December, indicative of slight expansion in the manufacturing sector. This marked a fourth straight gain for the PMI.
4. BoC Overnight Rate: Wednesday, 15:00. The BoC will set the benchmark rate via a rate statement. The rate has been set at 0.50% since May 2015, and no change is expected.
5. GDP: Thursday, 13:30. GDP is released every month and should be considered a market-mover. In November, the economy rebounded with a gain of 0.4%, edging above the forecast of 0.3%. The estimate for December stands at 0.3%.
6. BOC Deputy Governor Timothy Lane Speech: Thursday, 18:00. Lane will deliver remarks at an event in Montreal. A speech that is more hawkish than expected is bullish for the Canadian dollar.

* All times are GMT

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3088 and climbed to a high of 1.3210, as resistance held at 1.3210 (discussed last week). Late in the week, the pair dropped to 1.3031. The pair closed the week at 1.3084.

Live chart of USD/CAD:

USDCAD chart by TradingView

Technical lines, from top to bottom

We start with resistance at 1.3433. This line was the high point in October.

1.3351 is next.

1.3212 has been a high point in February.

1.3124 remains a weak resistance line.

1.3003 is providing support. This line is protecting the symbolic 1.30 level.

1.2908 has held in support since September 2016.

1.2763 is next.

1.2653 has provided support since June 2016. It is the final support line for now.

I am bullish on USD/CAD

There is unease and disillusion with Donald Trump, as the new administration seems more interested in sparring with opponents than bringing real change. Still the US economy is doing well and a rate hike seems only a question of timing.

Our latest podcast is titled Fed refocus as monetary matters once again