The Canadian Dollar has stopped its massive sell-off over the past few weeks and was stuck in a narrow trading range especially against the US Dollar. The USDCAD was unable to breakout above 1.2834 and unable to breakdown below 1.2351. As far as technical indicators are pointing out there is no catalysts which could result in a strong enough move to result in either a breakout or a breakdown. The Fibonacci Retracement Levels are providing strong support and resistance.
Forex traders should look for fundamental reports to provide the catalyst for the next big move. This week will offer several reports which have the potential to increase momentum to a degree which can result in a breakout or breakdown. Several staggered reports pointing in the same directions are possible this week. On Monday the Ivey PMI for March was reported at 47.9. This level points towards a greater contraction than in February and therefore bearish news for the Canadian Dollar.
The Bank of Canada Senior Loan Officer Survey Index for the first-quarter came in at 6.7 which was much better than the -1.0 economists expected and far above the -2.7 which was reported in the fourth-quarter. The Business Outlook Future Sales Index for the first-quarter was reported at 4. Economists expected the index to come in at 0, but it was still far below the 8 reported in the fourth-quarter. The Canadian Dollar remained in the middle of its current range.
On Tuesday and Wednesday there are no economic news which can push this currency pair around and forex traders should be prepared for more sideways trading during those two days. This can be taken as a great opportunity to position forex portfolios for Thursday and Friday which will deliver some key economic reports which are likely to allow for a rally in the Canadian currency. On Thursday building permits for February will be released and economists expect an increase of 4.3%. Forex traders can compare this to January’s contraction of 12.9%.
Friday will feature the release of the Canadian employment report for March which is expected to show no job gains for the month. While this is not encouraging it is better than the 1,000 lost jobs reported in February. The unemployment rate is expected to remain unchanged at 6.8%. A positive figure could just be strong enough to rally the Canadian Dollar which is also expected to receive a boost from housing starts. Economists expect an increase of 175,000 in March which forex traders can compare to the 156,300 reported in February.
