In our USDCAD forecast we note that it was trading in the red at 1.2376 earlier in the session. That compares unfavourably with today’s high-watermark of 1.2423. At the time of writing USDCAD is fractionally higher at 1.2409, up 0.06%.
The pair has been pressured lower after failing to keep its head above the 61.8% retracement level. The price dropped ahead of the US ADP Non-Farm Employment Change and before the Canadian GDP dat was released.
USD/CAD is still trading in the red despite the fact that the US ADP Non-Farm Employment Change was reported better than expected at 692,000 versus 555,000 that was forecast by surveyed economists.
The Loonie was saved from further bouts of selling by today’s Canadian GDP release, which registered only a 0.3% drop compared to the much larger 0.8% that was estimated for May.
With Canadian GDP data therefore stronger than anticipated, it added to the drag on the pair, but this could be temporary given the latest indication of the rude health of the US economy.
This time it was the US Pending Home Sales figures that shone – increasing unexpectedly by 8.0%, when economists had been expecting a 1.1% drop. The red-hot housing market keeps surprising to the up side and this latest data has aded to the buying behind a firm dollar today, but not enough to arrest its decline against CAD.
Nevertheless, the vigour displayed in the housing data regarding the US economy may contribute to helping USDCAD to resume its growth. Today may have been a profitable one for forex day trading this pair.
USDCAD forecast – technical analysis: downside limited
USD/CAD found strong resistance above the 61.8% retracement level and now it stands at 1.2359 level. Today’s bearish engulfing signalled that the bulls are exhausted. Still, it remains to see how the price will react if the US Dollar Index continues to increase.
The USD could take the lead soon again if the US economic data continues to beat expectations as the week unfolds. As forex traders will be all too aware, the US is to release the ISM Manufacturing PMI and the Unemployment Claims tomorrow, and the NFP, Unemployment Rate, and the Average Hourly Earnings on Friday.
Moving back above the 61.8% retracement level and a possible leap above today’s high of 1.2423, could activate further growth, at least until the 1.2486 level is reached. Technically, the downside seems limited right now as long as it stays above the weekly pivot point (1.2345).
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