The Canadian dollar enjoyed a sixth straight winning week, with gains of close to 1.0%. The currency is in positive territory at the start of the week. Currently, USD/CAD is trading at 1.3208, down 0.44% on the day.
Manufacturing sales shines
The week ended on a positive note for Canadian fundamentals, as Manufacturing Sales climbed 20.7% in June, above the estimate of 16.4%. This follows a gain of 10.7% beforehand and is a further sign that the recovery is taking hold in Canada. On Monday, Foreign Securities Purchases declined by C$13.5 billion in June, well off the estimate of a gain of C$20.0 billion.
Ahead – OPEC meeting, Fed minutes
With no Tier-1 data out of the US or Canada until Wednesday, we could see range-trading from USD/CAD until the middle of the week. Wednesday features two events which could shake up the currency markets. First, OPEC members will hold a meeting to discuss easing production cuts. Oil prices have recovered nicely since plummeting to around USD11.00 in mid-April. However, OPEC cuts and stronger demand for oil have boosted prices to the USD42.00 level. Canada is a major oil producer, so any movement in oil prices will likely be reflected in the value of the Canadian dollar.
The second event is the release of the FOMC minutes. The Federal Reserve has kept interest rates close to zero in the wake of the Covid-19 pandemic. With the US showing signs of recovery, such as better employment numbers, investors will be keeping a close eye on the tone of the minutes – a hawkish stance from policymakers could give a much-needed boost to the US dollar.
USD/CAD moved lower in the Asian session. The pair posted small losses in European trade and continues to head lower in the North American session.
- 1.3289 is the next resistance line. This line immediately follows the 10-day MA. Above, we have resistance a 1.3313
- USD/CAD is testing support at 1.3223. The next support line is 1.3181, which is under pressure
- The 10-day MA line, which is at 1.3227, remains relevant
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