USD/CAD showed little movement last week, as the pair continues to have a quiet month of July. There is only one Canadian event on the schedule, so U.S. numbers will likely have a magnified impact on the Canadian dollar. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.

Canada’s inflation rate continues to drop, and declined by 0.2% in May. This was the first decline in six months and could dampen any thoughts by the BoC of raising interest rates in the next few months. Core CPI slipped to 0.0%, down from 0.4% a month earlier. On the manufacturing front, manufacturing sales bounced back nicely in May, jumping 1.6%. This matched the forecast. ADP nonfarm payrolls were solid, with a reading of 30.4 thousand new jobs in June. The week wrapped up with weak consumer spending data. Core retail sales declined 0.3%, shy of the estimate of 0.3%. Retail sales contracted 0.1%, missing the estimate of 0.3%.

In the U.S., economic numbers remain strong. Retail sales ticked lower to 0.4% in June, down from 0.5%. Still, this was above the forecast of 0.1%. The numbers were identical for the core reading. There was positive news from manufacturing. The Empire State Manufacturing Index climbed to 4.3 in July, up from -8.6 a month earlier. The Philly Fed Manufacturing Index jumped to 21.8, its highest level in 9 months. The week ended up with UoM Consumer Sentiment, which climbed to 98.4 in July, up from 97.9 a month earlier. 

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

1. Wholesale Sales: Monday, 12:30. The indicator is a useful gauge of consumer spending. In April, wholesale sales jumped 1.7%, its best gain since January 2017. The estimate for May stands at 0.8%.

* All times are GMT

USD/CAD Technical Analysis

Technical lines from top to bottom:

We begin with resistance at 1.3445. This is followed by 1.3385.

1.3350 has held in resistance since mid-June. Next is 1.3265.

1.3175 was a swing low in late November.

1.3125 was a low point earlier in November

1.3048 (mentioned last week) was relevant throughout the week. 1.2916 is next.

1.2831 has held in support since early October. 1.2729 follows.

1.2654 is the final support level for now.

I remain neutral on USD/CAD

It’s been a lazy July for the pair, and a lack of events this week could mean that the lack of activity will continue. The U.S. economy remains solid, but broad hints from the Powell & Co. that the Fed will lower rates could limit any gains by the greenback.