USD/CAD Outlook: 1st February 2021 Canada – Manufacturing PMI On Monday, at GMT 2:30 p.m.,…
USD/CAD Resumes Downtrend as Canadian Housing Market Likely to Rebound Soon
Canada – Building Permits
On Wednesday, at GMT 12:30 p.m., Statistics Canada published the monthly Building Permits figure. It measures the changes in the total number of new permits issued for constructing new premises in the country.
Building permits are mandatory to start building construction. So, the number of new permits acts as a leading indicator of the future construction activity in the country. Also, CFD traders consider that new constructions help energize the economy, as new buildings require materials from many other industries.
Last month, the amount of new Building Permits declined by as much as -12.9%. Analysts were expecting it to grow at 6.0% this month. However, the actual figure came out way better and grew by 6.9%.
United States – Unemployment Rate
On Friday, at GMT 12:30 p.m., the US Bureau of Labor Statistics will release the national unemployment rate. It measures the percentage of the total work force which remained unemployed over the past month.
Forex investors consider the unemployment rate to be one of the most important fundamental indicators of the American economy. It is because one of the main goals of the Federal Reserve is to keep unemployment as low as possible. Although this is a lagging indicator, analyzing this data can help Forex traders predict future interest rates and inflation situations in the country.
Last month, the unemployment rate in the United States came out at 5.9%. This month, analysts are expecting it to come down to 5.7%.
The Canadian Dollar has been appreciating against the US Dollar over the last several months and remained below below the 200-day moving average. But in July 2021, it started a bullish retracement and penetrated above the 200-day moving average briefly. Since July 21, 2021, it resumed the downtrend and the price fell by around 380 pips. On July 30, the 10-period moving average crossed below the 20-period moving average, confirming the bearish trend. Currently, it is trading just above the support near the 1.2475 level.
The US unemployment rate will likely improve to 5.7%. However, the Canadian building permits went up from –12.9% to 6.9%, indicating a strong rebounding in the housing sector. We believe it would set a bearish fundamental outlook for the USD/CAD this week. Therefore, if the USD/CAD closes below the support near the 1.2475 level, it would likely attract additional bearish momentum in the market.
Hence, US CFD traders should look out for trading opportunities below this major support level around 1.2475.
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at email@example.com