USDCAD Analysis
| Week Ending 2025-01-31 | |||
| Open | High | Low | Close |
| 1.44 | 1.46 | 1.44 | 1.45 |
| Performance | ||||||
| Period | Pct | Chg | Momentum | |||
| Friday | 0.33% | 47.6 Pips |  |
|||
| Week 2025-01-31 | 1.08% | 155.5 Pips |  January |
1.33% | 190.8 Pips |  |
Upcoming key events for the new week (London Time)
Fri 01:30 PM Labour Force Net Change in Employment
Fri 01:30 PM Nonfarm Payroll Employment
What happened over the week
In the United States, the Personal Consumption Expenditures (PCE) Price Index showed some varying results for December. According to the Bureau of Economic Analysis, while the 12-month PCE Price Index excluding food and energy remained unchanged at 2.8%, the monthly increase from November to December was up to 0.2% from 0.1%. On the other hand, overall PCE Price Index monthly increased to 0.3% from 0.1%, and the yearly rate went up to 2.6% from 2.4%. These figures indicate an increase in consumer spending as it rose to 0.7% from 0.4% in the previous month, with U.S. GDP showing further price expansion by increasing to 2.2% in Q4 from Q3’s 1.9%. However, the U.S. GDP annual rate did see a decline to 2.3%, down from 3.1% in Q3. Personal income saw an increase in December, and employment costs also rose by Q4. Meanwhile, both durable goods orders, particularly excluding defense and transportation, displayed notable shifts with a fall in December orders from the previous month.
In Canada, the economic outlook was less favorable with GDP decreasing to -0.2% in November from October’s figure of 0.3%, according to Statistics Canada. This contraction, along with the Bank of Canada’s decision to lower its interest rate from 3.25% to 3%, reflects a dampening economic activity within the country. This rate cut, paired with Canada’s struggling GDP performance, portrays a slowdown and potential challenges in the Canadian economy.
The movements in USDCAD can be greatly influenced by these economic events. The U.S. maintaining a stable yet gradually increasing PCE index with strong consumer spending signals relative economic stability. Conversely, Canada’s weaker economic indicators, such as the decreasing GDP and lower interest rates, suggest vulnerability, pushing investors to favor the U.S. dollar. Consequently, this discrepancy strengthens USDCAD, as seen by its recent rise. The potential imposition of tariffs by the U.S. could further pressure Canadian economic conditions, potentially leading to a more significant appreciation of USDCAD. This trend suggests that in the near term, unless favorable economic data emerges from Canada, or negative data from the U.S., USDCAD might continue to rise or stabilize at higher levels.
From X (Twitter)
We have lowered our policy interest rate to 3.0%.
Learn more: https://t.co/5mj02qT1AO#economy #cdnecon pic.twitter.com/cNOp3UVX5a
— Bank of Canada (@bankofcanada) January 29, 2025
What can we expect from USDCAD for the new week and what happened on Friday?
USDCAD on Friday rose 0.33% to 1.45. Price is above 9-Day EMA while Stochastic is rising. For the week ending 2025-01-31, the pair rose 1.08% or 155.5 pips higher.
Looking ahead, USDCAD looks mixed as the pair is likely to consolidate above week low of 1.44.
For the new week, our technical outlook looks bullish, immediate upside resistance level at 1.46 (WR1) with break above could target 1.47 (WR2). On the downside, we are looking at week low of 1.44 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.46 would suggest bullish bias after recent positive movement.
For the month of January, USDCAD is up by 1.33% or 190.8 pips higher.
Weekly key levels to watch out:
| R3 | 1.48 |
| R2 | 1.47 |
| R1 | 1.46 |
| Weekly Pivot | 1.45 |
| S1 | 1.44 |
| S2 | 1.43 |
| S3 | 1.42 |
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