Outlook pessimistic for USD/CAD, focus on 1.3190 area

The US dollar is currently in a period of flux, not least due to the ongoing questions about the state of the country’s economy.

It is facing an especially pessimistic outlook in its pair with the Canadian dollar, and the overarching trends are not looking positive.

The USD/CAD pair scaled to a very valuable position back at the end of Q1 2020 when global forex traders moved to the greenback in their droves.

However, since the coronavirus pandemic’s economic impact was lessened to some degree, the currency pair has – like many of the dollar’s pairs – declined somewhat in value.

Looking back over the price chart in recent days, movements appear to show the pair locked between the 1.3133 level and the 1.3245 region.

Strategists have highlighted the 1.3190 level as a particular point to watch.

According to some, a rise for the currency that surpasses that level could then lead to 1.3245 or beyond.

However, this is far from certain – some interpretations of the price chart indicate that the ongoing crude oil price rises could lead to a decline in pair values.

Canada is a major exporter of oil, and the price of the commodity forms a key part of the currency’s performance.

When the price of oil goes up, the expected performance of the Canadian dollar can often also rise.

In terms of the economic calendar, meanwhile, Thursday of this week is set to see a release focusing on Canada’s currency account levels for Q2 2020.

This is due to come out at 12:30pm GMT.

At 3:15pm GMT on Thursday, meanwhile, there will be a speech from the Governor of the Bank of Canada, Tiff Macklem.

Friday is also set to be a busy day for the Canadian dollar.

An annualised gross domestic product release for Q2 2020 is due out at 12:30pm GMT.

This is set to show a quarter-on-quarter change from -8.2% to -39.6%, which is a significant change.

There will also be a gross domestic product release for the month of June in particular out in the same time slot.

This is widely expected to show a change from 4.5% to 5.6%.

The US dollar, meanwhile, will also have its own economic calendar challenges to contend with as the week unfolds.

The main one is likely to be the Jackson Hole Symposium, which will bring together a variety of central bankers from around the world to discuss issues relating to monetary policy.

However, other key events are also scheduled in.

A release looking at personal income levels for July will come out at 12:30pm GMT on Friday.

This is expected to show a month-on-month change from -1.1% to -0.2%.

The Chicago Purchasing Managers’ Index for August is also expected out on Friday.

This key measure of confidence in the business world is expected at 1:45pm GMT.

Chris Lee

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