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USD/CAD showed movement in both directions and was almost unchanged over the past week. The data calendar for the upcoming week is very light, with only one minor event. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.  

Canada Manufacturing PMI slowed to a six-month low in January, falling from 57.9  to 54.4. Still, the index remains in expansionary territory, with readings well above the 50-level.

January job numbers were awful. The economy shed some 212.8 thousand jobs; a second straight decline and much weaker than the estimate of -43.5 thousand. The unemployment rate jumped from 8.6% to 9.4%, its highest level in five months. This missed the forecast of 8.9%.

Despite the dismal job data, the Canadian dollar gained ground after the release, as US Nonfarm Payrolls sent the US dollar broadly lower. Ivey PMI improved to 48.4, up from 46.7. The index remained in contraction territory for a second successive month.

In the US, ISM Manufacturing PMI dipped to 58.7, down from 60.7 beforehand. Still, this figure points to strong expansion, as manufacturing remains a bright spot in the US economy. The services sector grew for an eighth straight month in a row, as the ISM Services PMI improved to 58.7, up from 57.2 beforehand. This was the highest reading since February 2019.

U.S. Nonfarm Payrolls disappointed with a negligible gain of 49 thousand, which didn’t even reach the forecast of 85 thousand. Wage growth rose 0.2%, down from 0.8% beforehand. There was better news from the unemployment rate, which dropped from 6.7% to 6.3%, its lowest level since March.

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

1. Wholesale Sales: Monday, 14:30. This consumer spending indicator slowed to 0.7% in November, down from 1.0%. We now await the December data.

USD/CAD Technical Analysis

Technical lines from top to bottom:

• We start with resistance at 1.3074.
• 1.2977 is protecting the symbolic 1.30 level.
• 1.2916 (mentioned last week) was last tested in resistance in mid-December.
• 1.2782 is next.
• 1.2684 is the first support level.
• 1.2587 is next.
• 1.2489 is the final support level for now.

I am neutral on USD/CAD

The Canadian dollar escaped a bullet last week, as it managed to hold its own despite dismal job numbers. With the Canadian economy showing strains due to strict COVID-19 lockdowns, the Canadian dollar could face some pressure.