USD/CAD Forecast May 31-June 4 – Will Canada GDP Boost Canadian Dollar?

The Canadian dollar was almost unchanged last week, as USD/CAD remained in 1.20-territory. There are four releases in the upcoming week, including GDP. Here is an outlook for the highlights and an updated technical analysis for USD/CAD. There was no tier-1 data in Canada last week.

In the US, Conference Board Consumer Confidence held steady in May, at 117.2. This was down marginally from 117.5 in April. Second-estimate GDP for the first quarter came in unchanged at 6.4%, confirming the initial reading.

Unemployment claims fell to a new post-COVID-19 low of 406 thousand, down from 444 thousand. Durable goods orders disappointed with a read of -1.3% in April, its second decline in three months. The PCE index, the Fed’s preferred inflation gauge, jumped to 3.6% in April, up from 2.2%. This could lift the US dollar if investors believe that the Fed will consider tapering QE.

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

  1. Current Account: Tuesday, 12:30. Canada has not posted a current account surplus since 2008. The estimate for Q1 of 2021 stands at C$-8.3 billion.
  2. GDP: Tuesday, 12:30. Canada releases GDP on a monthly basis. After a weak gain of 0.4% in March, the economy is projected to show a gain of 1.0% in April.
  3. Employment Report: Friday, 12:30. The economy shed 207.1 thousand jobs in April and we will soon receive the May data. The unemployment rate is expected to tick upwards to 8.2% in May, up from 8.1%.
  4. Ivey PMI: Friday, 14:30. The PMI slowed to 60.6 in April, down sharply from 72.9. We now await the May data.

USD/CAD Technical Analysis

Technical lines from top to bottom:

  • 1.2267 has held in resistance since early May.
  • 1.2205 is next.
  • 1.2136 was tested late in the week.
  • 1.2074 is an immediate line of support.
  • 1.2005 is protecting the symbolic 1.20 level.
  • 1.1943 has held in support since 2015.
  • 1.1874 (mentioned last week) is the final line of support for now.
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