USDCAD Analysis
| Week Ending 2024-08-16 | |||
| Open | High | Low | Close |
| 1.37 | 1.37 | 1.37 | 1.37 |
| Performance | |||||
| Period | Pct | Chg | Momentum | ||
| Friday | -0.41% | -56.7 Pips |  |
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| Week 2024-08-16 | -0.44% | -59.9 Pips | |
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| August | -0.96% | -132.3 Pips | |
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Upcoming key events for the new week (London Time)
Tue 01:30 PM CPI Inflation Rate (12-mth)
Wed 07:00 PM FOMC Meeting Minutes 
Thu 01:30 PM Initial Unemployment Insurance Claims Fri 03:00 PM Jackson Hole Symposium Fri 03:00 PM Federal Reserve Chair Jerome Powell speech (Jackson Hole Symposium)
What happened over the week
In the United States, several key economic indicators exhibited mixed signals for July and early August. The University of Michigan reported an increase in the Consumer Sentiment Index to 67.8 points in August from 66.4 points in July, indicating a mildly improved consumer outlook. However, the housing sector presented negative data; housing starts dropped to 1.238 million in July from 1.353 million in June, and building permits fell to 1.396 million from 1.454 million. On a more positive note, retail trade improved, with monthly retail sales rising by 1% in July, up from no change in June, according to the Census Bureau. Labor market conditions showed some improvement as initial unemployment insurance claims decreased to 227,000, down from the revised figure of 234,000 for the week ending August 10, as reported by the Department of Labor.
Inflation dynamics also revealed a multi-faceted picture. The Bureau of Labor Statistics noted a modest increase in the monthly Consumer Price Index (CPI) inflation rate to 0.2% in July from a negative 0.1% in June. However, the annual CPI inflation rate slightly eased to 2.9% in July from 3% in June. Meanwhile, the Producer Price Index (PPI) indicated a slowdown in price pressures from the supply side; the PPI excluding Food & Energy dropped to 0% from the revised value of 0.3% in June. Similarly, the overall 12-month PPI decreased to 2.2% in July from a revised 2.7% in June, with the monthly PPI also easing to 0.1% in July from 0.2% in June, reflecting lower input costs for producers.
The mixed bag of U.S. economic data had notable implications for the USD/CAD exchange rate, as observed last Friday when USD/CAD fell 0.41% to 1.36760. Throughout the week ending August 16, 2024, the USD/CAD moved lower by 0.44%. The overall softer data points—particularly weakening housing starts, building permits, and a declining PPI—appear to have contributed to a reduced demand for the U.S. dollar. On the other hand, the marginal improvements in consumer sentiment and retail sales were insufficient to offset the broader negative sentiment among market participants, leading to a depreciation of the USD against the CAD. Consequently, the USD/CAD pair reflected a weaker dollar driven by concerns over potential economic headwinds and a cautious outlook on inflation and growth.
From X (Twitter)
Employment was little changed in July 2024 (-2,800; -0.0%), while the employment rate fell 0.2 percentage points to 60.9%. The unemployment rate was unchanged at 6.4%.
For more info: https://t.co/Pn04OqBT6r. pic.twitter.com/eqnrDvYVCQ
— Statistics Canada (@StatCan_eng) August 9, 2024
What can we expect from USDCAD for the new week and what happened on Friday?
USDCAD on Friday dropped -0.41% to 1.37. Price is below 9-Day EMA while Stochastic is falling. For the week ending 2024-08-16, the pair dropped -0.44% or -59.9 pips lower.
Looking ahead, USDCAD looks bearish as the pair posted lower in Friday trading session.
For the new week, our technical outlook looks bearish, immediate support level is at 1.37 (WS1) with break below could see further selling pressure towards 1.36 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 1.37 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 1.37 would indicate selling pressure.
For the month of August, USDCAD is down by -0.96% or -132.3 pips lower.
Weekly key levels to watch out:
| R3 | 1.38 |
| R2 | 1.38 |
| R1 | 1.37 |
| Weekly Pivot | 1.37 |
| S1 | 1.37 |
| S2 | 1.36 |
| S3 | 1.36 |
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