USD/CAD Forecast Sep. 18-22

Dollar/CAD consolidated its losses and defined a new, lower range. The upcoming week features inflation data among other figures. Here are the highlights and an updated technical analysis for USD/CAD.

Data in Canada was positive, with a beat in housing starts and also in the NFPI. Together with a rise in oil prices, it was enough to hold back the comeback of the greenback. Can this stability continue? The recent past points to resumption of the downtrend after this consolidation phase.

Updates:

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

1. Foreign Securities Purchases: Monday, 12:30. This monthly report reflects the inflows or outflows of foreign monies into Canada. A surprising outflow was recorded in June, but it was less than 1 billion. An inflow of 4.46 billion is on the cards now.
2. Manufacturing Sales: Tuesday, 12:30. After three consecutive months of rises, the volume of sales dropped in June by a 1.8%, worse than had been expected. Another slide is on the cards for July: 1.8%.
3. Wholesale Sales: Thursday, 12:30. Sales at the wholesale level eventually reach the retail level. Similar to manufacturing sales, a drop was recorded after several months of increases. After a slide of 0.5%, another squeeze of 0.9% is on the cards for June.
4. CPI: Friday, 12:30. The Bank of Canada has raised rates because it sees inflation in the pipeline. Are their assumptions correct? We will get an insight with the inflation report for August. Headline monthly CPI is expected to rise by 0.2% after remaining flat in July. Core CPI dropped by 0.1% last time. The Bank also publishes other measures of core inflation: Common CPI rose by 1.4% y/y in July, the Median CPI by 1.7% and the Trimmed CPI by 1.3%. Any advances in these measures will boost the loonie.
5. Retail sales: Friday, 12:30. This report competes with the inflation one. Nevertheless, consumption is important as well. Retail sales are expected to rise by 0.1% in July after the same scale was recorded in June. Core sales carry expectations for 0.4% after 0.7%.