USD/CAD Forecast April 22-26 – Canadian Dollar Dips Despite Strong Consumer Data

USD/CAD reversed directions last week, posting gains of 0.50%. This week’s key event is the Bank of Canada rate decision. Here is an outlook for the highlights of this week and an updated technical analysis for USD/CAD.

Canadian inflation and retail sales numbers were strong last week, but that wasn’t enough to prevent a losing week for the Canadian dollar. CPI remained steady at a respectable 0.7%. Retail sales jumped 0.8%, ending a losing streak of three straight declines. Core retail sales also were solid, with a gain of 0.6%.

In the U.S., retail sales data was also sharp. After a decline in March, retail sales jumped 1.6%, above the estimate of 0.9%. Core retail sales gained 1.2%, beating the forecast of 0.7%. As well, unemployment claims sparkled with a reading of 199 thousand. This was only the second reading below the 200-K level in 2019.

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

https://www.tradingview.com/x/hva602CZ/

  1. Wholesale Sales: Tuesday, 12:30.Wholesales sales is a leading indicator of consumer spending, which is key driver of economic growth. The indicator improved to 0.6% in January, a 3-month high.
  2. Canadian Rate Decision: Wednesday, 14:00, press conference at 15:15. The Bank of Canada has been in dovish mode in 2019, after aggressively raising interest rates in 2018. The bank has held rates at 1.75% for the past four months. The economic slowdown has been deeper than the BoC expected, leading to speculation that a rate cut could be in the cards later this year. The bank is expected to maintain rates at this week’s meeting, but a dovish rate statement could send the Canadian dollar lower.

USD/CAD Technical Analysis

Technical lines from top to bottom:

We start at 1.3757, which has held since May 2017.

1.3660 was the high point for USD/CAD in December.

1.3547 capped USD/CAD in June 2017. Next, 1.3445 was the peak in early December.

1.3385 (mentioned last week) was tested in resistance throughout the week and the pair finally broke through at the end of the week.

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