USD/CAD Forecast October 8-12 – Dancing The USMCA -

USD/CAD Forecast October 8-12 – Dancing The USMCA

Oct 07, 2018Jeremy ParkinsonFinance0

Dollar/CAD dropped sharply as the US and Canada finally reached a new trade deal. Can the loonie continue higher? The second week of October features a few housing figures. Here are the highlights and an updated technical analysis for USD/CAD.

In a late-night effort, Canada and the US struck an accord or at least a framework for one. The USMCA replaces NAFTA and consists of few changes to the original deal. The loonie jumped, with USD/CAD kicking off the week with a significant weekend gap. In addition, oil prices remained bid, supporting the C$. The US Dollar rode higher on robust data, a surge in the benchmark 10-year yields and upbeat comments from Fed Chair Powell. Jobs reports from both countries were mixed. The US NFP missed with134K but upwards revisions compensated. Canada gained over 60K jobs but they were part-time ones and wages dropped. The choppy trading around USD/CAD did not result in any long-term moves.

Updates:

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

Housing Starts: Tuesday, 12:15. The annualized level of housing starts stood at 201K in August, the second consecutive drop. We could see a bounce now. The housing sector is off the highs amid curbs to foreign buying enacted in Vancouver and in Toronto. A level of 203K is on the cards now.

Building Permits: Wednesday, 12:30. The second housing figure for the week is lagging, only for August. Nevertheless, it is no less important. Also here, we have seen two consecutive drops, with -0.1% in July.

NHPI: Thursday, 12:30. The New Home Price Index hardly moved in recent months. Prices edged up by 0.1% in July and in June and remained flat in the previous two months. A rise of 0.2% is forecast.

*All times are GMT

USD/CAD Technical Analysis

Dollar/CAD kicked off the week with a weekend gap, falling below 1.280 mentioned last week and never looking back.

Technical lines from top to bottom:

1.3295 held the pair down in mid-July. 1.3220 capped it earlier in the month.