USD/CAD Forecast May 1-5

USD/CAD posted a second straight week of sharp gains, climbing 170 points. The pair closed the week at 1.3659, its highest weekly since February 2016. This week’s key event is Employment Change. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.

The Canadian dollar continued to slide last week. Weak data hurt the currency, as GDP came in at a flat 0.0% in March, its weakest reading in four months. Core Retail Sales came in at -0.1% in March, compared to 1.7% a month earlier. In the US, GDP grew by an annualized rate of 0.7% in the first quarter, weaker than expected and the lowest in three years.

Updates:

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

1. Manufacturing PMI: Monday, 13:30. The PMI has pushed to higher levels for 6 consecutive months. The index climbed to 55.5 points in March. Will the upward trend continue in April?
2. Trade Balance: Thursday, 12:30. Canada’s posted a trade deficit of C$-1.0 billion in February, following three straight surpluses. The markets are expecting a small surplus of C$0.3 billion in the March report.
3. BoC Governor Stephen Poloz Speech: Thursday, 20:25. Poloz will speak at an event in Mexico City. The markets will be looking for clues regarding future monetary policy.
4. Employment Change: Friday, 12:30.This is one of the most important indicators and should be treated as a market-mover. The indicator posted has posted strong job gains in Q1, and the trend is expected to continue in April, with an estimate of 20.0 thousand. The unemployment rate is expected to remain unchanged at 6.7%.
5. Ivey PMI: Friday, 14:00. The indicator climbed to 61.1 in March, its highest level since January 2016. The upward trend is expected to continue, with the estimate for April standing at 62.3 points.

USD/CAD Technical Analysis

USD/CAD opened the week at 1.3483 and quickly dropped to a low of 1.3408. The pair then reversed directions and climbed to a high of 1.3697, as resistance held firm at 1.3757 (discussed last week). USD/CAD closed the week at 1.3649.