USDCAD Analysis
| Week Ending 2024-12-13 | |||
| Open | High | Low | Close |
| 1.42 | 1.42 | 1.41 | 1.42 |
| Performance | ||||||
| Period | Pct | Chg | Momentum | |||
| Friday | 0.11% | 15.8 Pips |  |
|||
| Week 2024-12-13 | 0.6% | 85.2 Pips |  December |
1.61% | 225.8 Pips |  |
Upcoming key events for the new week (London Time)
Tue 01:30 PM CPI Inflation Rate (12-mth)
Tue 01:30 PM Monthly Retail Trade (1-mth) Wed 07:00 PM Fed Interest Rate Decision (Federal Funds Rate) Wed 07:00 PM Interest Rate Projections 
Thu 01:30 PM Initial Unemployment Insurance Claims Thu 01:30 PM GDP annual rate | Q3 Fri 01:30 PM PCE Price Index, excluding food and energy (12-mth)
What happened over the week
In Canada, the Bank of Canada recently revised the policy interest rate downward to 3.25%, a reduction from the previous rate of 3.75%. This decision might signal attempts to stimulate the Canadian economy by making borrowing cheaper, thereby encouraging spending and investment across various sectors. With a lower interest rate, there could be an increased demand for credit which often results in a boost in economic activities; however, it also harbors a risk of inflation if not carefully managed. Source: Bank of Canada.
For the United States, the Bureau of Labor Statistics reported that the CPI inflation rate rose modestly to 0.3% in November from 0.2% in October, with the annual CPI inflation rate nudging up to 2.7% from 2.6% in the previous month. Interestingly, the core CPI, which excludes volatile food and energy prices, remained steady at 3.3% over the year, underscoring persistent underlying inflationary pressures. On the labor front, the third quarter observed a decline in unit labor costs to 0.8% from 1.9% in the preceding quarter, with labor productivity staying constant at 2.2%. This data suggests a stabilization in productivity level, albeit with a decrease in the cost of labor, which could reflect varying impacts on wage dynamics and business costs. Source: Bureau of Labor Statistics.
In terms of USDCAD, the exchange rate rose 0.11% to 1.42330 as of the latest report, marking a continued upward trend over the past three weeks and reaching its highest level since April 2020. The backdrop of the Canadian interest rate cut potentially positions the Canadian dollar less favorably against the U.S. dollar, given the former’s lowered yield appeal. Concurrently, with consistent inflationary data in the U.S. alongside stable productivity, there might be further implications based on upcoming economic indicators such as the Fed’s interest rate decision, GDP data, and retail trade figures. These events may either provide strength to the U.S. dollar or expose vulnerabilities, depending on the outcomes. Investors will closely watch these developments, which could influence further movements in the USDCAD rate.
From X (Twitter)
We have lowered our policy interest rate to 3.25%.
Learn more: https://t.co/MuMPaqbieR#economy #cdnecon pic.twitter.com/5SpWz4Girg
— Bank of Canada (@bankofcanada) December 11, 2024
What can we expect from USDCAD for the new week and what happened on Friday?
USDCAD on Friday rose 0.11% to 1.42. Price is above 9-Day EMA while Stochastic is falling in overbought zone. For the week ending 2024-12-13, the pair rose 0.6% or 85.2 pips higher.
Looking ahead, USDCAD looks mixed as the pair is likely to consolidate above week low of 1.41.
For the new week, our technical outlook looks bullish, immediate upside resistance level at 1.43 (WR1) with break above could target 1.43 (WR2). On the downside, we are looking at week low of 1.41 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.42 would suggest bullish bias after recent positive movement.
For the month of December, USDCAD is up by 1.61% or 225.8 pips higher.
Weekly key levels to watch out:
| R3 | 1.44 |
| R2 | 1.43 |
| R1 | 1.43 |
| Weekly Pivot | 1.42 |
| S1 | 1.42 |
| S2 | 1.41 |
| S3 | 1.40 |
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