By TraderVox.com
Tradervox.com (Dublin) – The Canadian dollar increased as the demand for riskier asset returned in the market last week. Standing at only 28 pips from parity, the Canadian dollar took advantage as Draghi, The European Central Bank President indicated that the bank will take decisive measures to preserve the euro. The USD/CAD cross opened the week with a move upwards, breaking the resistance line at 1.02 for a short period. The pair then dropped to 1.0028, but the support line at 1.0030 has held firm this week with the currency currently trading at 1.0037 as the market for key releases from Canada.
The first major release is the Canadian GDP data which will be released on Tuesday at 1230hrs. The Canadian economy expanded by 0.3 percent on April after it increased by 0.1 percent in March. Major sectors that grew noticeably include the mining and oil and gas sectors which grew by 2.7 percent. The market is expecting another growth of 0.2 percent when the data is released. Together with the GDP data, the RMPI/IPPI report will be released. The Industrial Product Price Index was unchanged in April while the Raw Material Price Index dropped by one percent in the same month. This time, the market expects a rise of 0.6 percent in IPPI and a growth of 1.7 percent in RMPI.
With these reports expected from Canada and releases from projected to disappoint, the USD/CAD pair is expected to remain in the downtrend channel this week. Further, any strong move from Draghi will push the Canadian dollar higher against the US dollar and a push to parity might be experienced.
Some of the technical levels we are looking at this week include from the top; a resistance line at 1.0245 which served as a separator for an upward move in May 2010, it has regain some momentum now as it has capped the pair in July 2012. The 1.02 round figure remains distinct separator as it has taken this role during the month of July. Other major resistance lines include 1.0150, 1.0066, and 1.0030. Support lines include parity, 0.9950, 0.99, 0.9840 and 0.9725.
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