USD/CAD Forecast March 15-19 – Canadian Dollar Cruises To 3-Year High On Sharp Job Numbers

The Canadian dollar rose to its highest level since February 2018 last week, as USD/CAD dropped by 1.44%. There are five events in the upcoming week, including the inflation report. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.  

The Bank of Canada upgraded to positive its forecast for GDP growth in Q1, noting that the economy was recovering more quickly than expected. The bank held interest rates at 0.25% and said it had no plans to raise rates until 2023.

U.S. dollar banknote with map

Canada posted outstanding employment numbers on Friday, which sent the Canadian dollar higher. The economy created 259,000 jobs in February, after two straight declines. The unemployment rate fell to 8.2%, down from 9.4%.

In the US, inflation ticked higher in February, much to the relief of the market, which has been concerned that pent-up demand could lead to runaway inflation. Core CPI edged up to 0.1%, up from 0.0%. Headline CPI ticked up to 0.4%, up from 0.3%. The week ended on a positive note, as UoM Consumer Sentiment for March rose from 76.2 to 83.0. Consumer confidence has risen to its highest level in 12 months.

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

  1. Manufacturing Sales: Monday, 12:30. Manufacturing Sales gained 0.9% in December, and are expected to jump 2.8% in January.
  2. Foreign Securities Purchases: Tuesday, 12:30. Purchases fell to C$5.08 billion in December, down sharply from C$11.78 billion. Will we see a rebound in January?
  3. Inflation Report: Wednesday, 12:30. Headline CPI rose 0.6% in January, its highest level in seven months. Another solid gain is projected for February, with an estimate of 0.7%.
  4. ADP Nonfarm Employment Report: Thursday, 12:30.  The ADP report painted a grim portrait of the labor market in January, with a reading of -231.2 thousand. We now await the February data.
  5. Retail Sales: Friday, 12:30. Retail sales for December pointed to a decline in consumer spending. The headline read fell by 3.4% and core retail sales came in at -4.1%. Analysts are bracing for another contraction in January, with a forecast of -3.0% for the headline reading and -2.8% for core retail sales.
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