USD/CAD Forecast June 1-5 – GDP Sinks, however Canadian Greenback Rallies

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    In Canada, constructing permits recorded a second sharp decline in as many months, with a studying of -17.1 p.c in April. The economic system tanked in March, plunging by 7.2 p.c. Nonetheless, this was stronger than the estimate of a 9.zero% slide. Inflation has additionally headed south, because the Uncooked Supplies Worth Index fell 13.Four% in April, after a drop of 15.6% beforehand.

    Within the U.S., shopper confidence improved in Might, because the CB shopper index got here in at 86.6, up from 85.7 a month earlier. First-quarter GDP was revised downwards to -5.zero%, in comparison with -Four.eight% within the preliminary estimate. Sturdy items plunged in April, with the headline determine falling by 17.2% and the core studying falling by 7.2 p.c. Unemployment claims proceed to fall, with 2.12 million new claims final week. This was barely larger than the forecast of two.10 million and raises the whole throughout Covid-19 to a staggering 41 million.

    USD/CAD day by day chart with help and resistance traces on it. Click on to enlarge:

    Manufacturing PMI: Monday, 13:30. Markit’s manufacturing buying managers’ index for Canada has proven a steep slide. Again in February, the index was at 51.eight, indicative of slight enlargement. Nevertheless, the index has slowed since then and got here in at 33.zero in Might, which exhibits important contraction.  Will the downturn proceed?
    Labor Productiveness: Friday, 12:30. Productiveness development is problematic in lots of developed economies. Canada’s figures dropped by zero.1 in This fall, after a acquire of zero.2% beforehand. We now await the Q1 information.
    BoC Charge Choice: Wednesday, 14:00. The Financial institution of Canada has stored charges near zero, because the economic system grapples with the monetary disaster. Policymakers are anticipated to keep up the present charge of zero.25% on the upcoming assembly.
    Commerce Stability: Thursday, 12:30. Canada suffers from persistent commerce deficits. In February, the deficit widened to C$1.Four billion, up from a deficit of C$1.zero billion beforehand. Nonetheless, this simply beat the forecast of C$-2.5 billion. The March information is subsequent.
    Employment Report: Friday, 12:30. Job losses have hit staggering ranges – the economic system shed some 1.99 million jobs in April, reflective of poor financial circumstances resulting from Covid-19.  Nevertheless, this determine was much better than the estimate of a lack of Four.zero million jobs. One other large decline is predicted in Might. The unemployment charge soared to 13.eight% in April, up from 7.eight% a month earlier. One other double-digit studying is predicted for Might.
    Ivey PMI: Friday, 14:00. The Ivey PMI is a helpful gauge of financial exercise. The index continues to lose floor, falling to 22.eight in April. This was down from 26.zero beforehand.  Will the downtrend proceed in Might?

    USD/CAD Technical Evaluation

    Technical traces from prime to backside:

    With USD/CAD recording sharp losses, we begin at decrease ranges:

    1.4159 (talked about final week) has been a resistance line for the reason that first week in Might. 1.4019 is subsequent.

    1.39 has some respiratory room in resistance following sharp losses by USD/CAD final week.

    1.3757 is a right away help degree. It might be examined early subsequent week.

    1.3661 has held in help since March.

    1.3550 is subsequent.

    1.3420 is the ultimate help degree for now.

    I stay bullish on USD/CAD

    The outlook for the Canadian economic system stays weak. GDP plunged 7.2% in Q1 and financial exercise stays at low ranges. This doesn’t bode properly for the Canadian greenback.

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