USDCAD on Friday rose 0.58% to 1.44800. Week ending 2025-01-17 rose 0.45%. What’s going on.

USDCAD Analysis

Performance
Period	Pct	Chg	Momentum
Friday	0.58%	84.2 Pips
Week 2025-01-17	0.45%	65.1 Pips	January	0.91%	130.2 Pips

Upcoming key events for the new week (London Time)

Mon 12:00 AM 2025 U.S. Presidential Inauguration of Donald Trump as the 47th president of the United States
Mon 05:00 AM Martin Luther King Jr. Day
Tue 01:30 PM CPI Inflation Rate (12-mth)

What happened over the week

In the United States, several key economic indicators from December and January provide a mixed picture. Building permits saw a slight decline to 1.483 million from the revised November figure. However, housing starts increased significantly to 1.499 million. The U.S. consumer spending showed a reduction in momentum, with the Monthly Retail Trade dropping to 0.4% from November’s 0.7%. The labor market showed signs of cooling, with initial unemployment claims rising to 217,000 from 201,000. On the inflation front, the Consumer Price Index (CPI) increased to 0.4% monthly, resulting in a 12-month inflation rate of 2.9%. Core CPI, excluding food and energy, slightly declined to 0.2% monthly. The Producer Price Index (PPI) shows an overall increase annually to 3.3%, although the monthly PPI decreased to 0.2%. The Treasury budget significantly improved to a deficit of $87 billion, showcasing a considerable reduction from the previous month’s figure.

The U.S. Manufacturing Business Outlook Survey presented a noteworthy improvement to 44.3 points in January, a significant rise from the severely revised December reading. This suggests improved business sentiment in manufacturing, which might have implications for future economic activities and supply chain conditions. Furthermore, with the changes in the CPI and PPI dynamics, inflationary pressures seem mixed but manageable at this stage.

The recent rise in the USD against the CAD, with USDCAD reaching 1.44800, can be attributed to these mixed U.S. economic indicators, signifying both resilience in parts of the economy and weaknesses in others, like consumer spending and rising unemployment claims. The anticipation surrounding the upcoming events, particularly the U.S. Presidential Inauguration and the Canadian CPI data, adds a layer of uncertainty and potential volatility. With the U.S. hosting critical events and improved business sentiment, the demand for the USD could remain strong, sustaining its strength against the CAD. Conversely, if the Canadian CPI reveals significant inflationary pressure, it might influence the Bank of Canada’s monetary policy stance, impacting the CAD. As such, traders might be vigilant, factoring in both Canadian and U.S. events before making decisive moves concerning USDCAD.

From X (Twitter)

Following a 2.1% increase in October, total manufacturing sales rose 0.8% to $71.5 billion in November 2024, on higher sales in 13 of 21 subsectors. https://t.co/Lfqtr0jkmN pic.twitter.com/qjAu7PYGbu

— Statistics Canada (@StatCan_eng) January 16, 2025

What can we expect from USDCAD for the new week and what happened on Friday?

USDCAD on Friday rose 0.58% to 1.45. Price is above 9-Day EMA while Stochastic is rising. For the week ending 2025-01-17, the pair rose 0.45% or 65.1 pips higher.

Looking ahead, USDCAD looks bullish as the pair ended higher after Friday trading session.

For the new week, our technical outlook looks bullish, immediate upside resistance level at 1.45 (WR1) with break above could target 1.46 (WR2). On the downside, we are looking at week low of 1.43 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.45 would suggest bullish bias after recent positive movement.

For the month of January, USDCAD is up by 0.91% or 130.2 pips higher.

Weekly key levels to watch out:

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New Residential Construction Source: Census Bureau
Manufacturing and Trade Inventories and Sales Source: Census Bureau
Advance Monthly Sales for Retail and Food Services Source: Census Bureau
Minutes of the Board’s discount rate meetings on November 18, December 9, and December 18, 2024 Source: Federal Reserve