The Canadian dollar endured its worst week since May 2016, losing 250 points. USD/CAD closed the week at 1.3369. This week’s key events are Trade Employment and Employment Change. Here is an outlook on the major market- movers and an updated technical analysis for USD/CAD.

In the US, Donald’s speech disappointed the markets, but stronger market sentiment over a rate hike boosted the greenback. Hawkish comments from Dudley and then from Brainard have sharply raised expectations of a March hike. In Canada, the BoC maintained the benchmark rate at 0.50%. GDP edged lower to 0.3%, matching the forecast.

Updates:

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

  • Trade Balance: Tuesday, 13:30. After a string of trade deficits, Canada posted a second straight surplus in December. The surplus improved to C$0.9 billion, but fell short of the estimate of C$1.2 billion. The January surplus is expected to drop to C$0.2 billion.
  • Ivey PMI: Tuesday, 15:00.The PMI dropped to 57.2 in January, short of the estimate of 58.3 points. The index is expected to widen to 58.9 in February.
  • Housing Starts: Wednesday, 13:15. Housing Starts provides a snapshot of the level of activity in the housing market. The indicator has posted two straight readings of 207 thousand, beating expectations each time. The February estimate stands at 205 thousand.
  • Building Permits: Wednesday, 13:30. Building Permits tends to show strong fluctuations, making accurate estimates a tricky task. In December, the indicator posted a sharp decline of 6.6%, weaker than the forecast of -3.5%.
  • Labor Productivity: Wednesday, 13:30. The indicator rebounded in Q3 to 1.2%, edging above the estimate of 1.1%. Will we see another gain in Q4?
  • NHPI: Thursday, 13:30. The housing inflation indicator dipped to 0.1% in January missing the estimate of 0.3%.
  • Employment Change: Friday, 13:30. The economy added 48.3 thousand in January, crushing the forecast of -10.1 thousand. The unemployment rate edged lower to 6.8%, shy of the forecast of 6.9%.
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