USD/CAD Forecast May 24-28 – Retail Sales Show Strong Growth

The Canadian dollar posted small gains last week, as USD/CAD dropped close to the symbolic 1.20 level. There is only one release in the upcoming week.  Here is an outlook for the highlights and an updated technical analysis for USD/CAD. 

Money, Canadian Dollars, Currency

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Canada’s Housing Starts slowed to 268 thousand in April, down from 334 thousand. This missed the forecast of 292 thousand. Inflation outperformed in April, as CPI rose to 3.4%, up from 2.2% and above the consensus of 3.2%. BoC CPI climbed to 2.3%, up from 1.4% and above the forecast of 1.3%.

The ADP Employment Report showed that the economy created 351 thousand new jobs in April, up sharply from 266 thousand. The week ended with solid retail sales data for March. Retail Sales rose 4.3%, crushing the estimate of 2.2.%. Core Retail Sales climbed 3.6%, above the estimate of 2.3%.

In the US, the Philly Fed Manufacturing Index slowed to 31.5, down sharply from 50.2 and shy of the forecast of 40.8. Unemployment claims fell for a third straight week, coming in at 444 thousand versus 478 thousand a week earlier. The Manufacturing PMI was up slightly to 61.5, above the forecast of 60.0. The Services PMI sparkled with a read of 70.1, as the business sector showed unprecedented growth. This beat the estimate of 64.3. The 50-level separates expansion from contraction (FXC, UDN).

USD/CAD daily graph with resistance and support lines on it. 

  1. Corporate Profits: Tuesday, 12:30.  Corporate Profits posted a gain of 7.9% in Q4, after a sizzling gain of 44.9% in the third quarter. We now await the first-quarter data.

Technical lines from top to bottom:

1.2350 has held since late April.

1.2275 (mentioned last week) is next.

1.2119 has some breathing room as resistance.

1.2034 is an immediate line of support.

1.1963 follows.

1.1875 is the final line of support for now.

I remain bearish on USD/CAD

The Canadian dollar has not posted a losing week since March, and rising commodity prices is contributing to a stronger Canadian dollar. We could see CAD attempt another break of the symbolic 1.20 line this week.

Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk ...

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