USD/CAD reversed directions last week, as the pair gained 0.50%. There are four events in the upcoming week, including inflation and retail sales. Here is an outlook at the highlights and an updated technical analysis for USD/CAD.
Canada ADP nonfarm payrolls were dismal, with a reading of -240.8 thousand. Foreign Securities Purchases rebounded in August, with a strong gain of C$15.5 billion, crushing the estimate of C$-3.0 billion. The week wrapped up with Manufacturing Sales, which came in at -2.0% in August, after three consecutive gains.
US consumer inflation slowed in September, as inflation levels remain at low levels. Both the headline and core readings dropped to 0.2%, down from 0.4% beforehand. The Philly Fed Manufacturing Index jumped to 32.3 in October, up from 15.0 points. This was the highest level since February. Unemployment claims climbed to 898 thousand, the highest level in seven weeks. Retail sales rebounded in September. The headline figure rose 1.9% and the core reading showed a gain of 1.5%.
- Wholesale Sales: Wednesday, 12:30. Wholesale Sales slowed to 4.3% in July, down from 18.5% beforehand. Still, this beat the estimate of 3.4%. We now await the August data.
- BoC Business Outlook Survey: Friday, 14:30. This well-respected survey looks at a wide range of business conditions, including spending and hiring expectations. It should be treated as a market-mover.
- Inflation Report: Wednesday, 12:30. Consumer inflation remains at low levels as the economy continues to struggle with the Covid-19 pandemic. CPI declined by 0.1% in August, after a reading of zero beforehand. Will inflation rebound in the September release?
- Retail Sales: Wednesday, 12:30. After two straight double-digit gains, retail sales slowed to just 0.6% in July. The core reading came in at -0.4%, the first decline in three months. We now await the August releases.
USD/CAD Technical Analysis
Technical lines from top to bottom:
1.3420 (mentioned last week) has held in resistance since the first week in August.
1.3330 is next.
1.3230 was tested late last week.
1.3149 has switched to a support role after USD/CAD posted gains last week.
1.3016 is next.
1.2935 has provided support since October 2018.
1.2841 is the final support level for now.
I am neutral on USD/CAD
Canada and the US are both grappling with the Covid-19 virus, as the economic recovery remains tenuous in both countries. With the US election edging closer, we could see volatility from the pair.