USD/CAD Forecast March 11-15 – Canadian Dollar Slides On Dovish BoC

USD/CAD recorded strong gains for a second successive week, climbing close to 1%. There are only two events on the calendar in the week ahead. Here is an outlook for the highlights of this week and an updated technical analysis for USD/CAD.

The Bank of Canada maintained the benchmark rate at 1.75%, where rates have been pegged since October. The rate statement was dovish, which weighed on the Canadian dollar. In the rate statement, policymakers dropped a reference to rates rising over time. Instead, the bank said that the economy will continue to require stimulus and said that there was “increased uncertainty” about future rate hikes. The pessimistic language is a result of the economic slowdown, which has been worse than the bank anticipated. The BoC’s dovish tone has reinforced market expectations that the bank will not raise rates in the near future, and could lower rates if the economy continues to weaken.

Canada and the U.S .both ended the week with key employment numbers, with very different results. Canada added 55,900, crushing the estimate of 0.6 thousand. In the U.S., nonfarm payrolls plunged to 20,000, much worse than the forecast of 180,000. Wage growth improved to 0.4%, above the estimate of 0.3%. The Canadian dollar responded with slight gains to end the week.

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

  1. NHPI: Thursday, 00:30. The New Housing Price Index has been pegged at a flat 0.00% for five successive months.
  2. Manufacturing Sales: Friday, 12:30. This key indicator should be treated as a market-mover. The manufacturing sector has been hurt by the global trading war, and manufacturing sales have declined in four of the past five releases. Another weak release could send the Canadian dollar lower.

*All times are GMT

USD/CAD Technical Analysis

USD/CAD continued to test resistance at 1.3445 (mentioned last week).

Technical lines from top to bottom:

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