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Forex - USD/CAD weekly outlook: May 16-20

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Forex Pros - Last week the U.S. dollar surged to a six-week high against its Canadian counterpart, before trimming gains in volatile trade on Friday as crude oil, Canada's largest export, rebounded following earlier losses.

USD/CAD hit 0.9743 on Friday, the pair's highest since March 3; the pair subsequently consolidated at 0.9686 by close of trade, easing up 0.25% on the week.

The pair was likely to find support at 0.9512, last Wednesday's low and resistance at 0.9743, Friday's high.

Crude oil futures jumped on Friday after official data showed that first quarter gross domestic product in the euro zone accelerated to 0.8% from 0.3% in the preceding quarter, outstripping expectations for a 0.6% gain.

Crude oil for June delivery in New York rose 0.4% to USD99.36 a barrel after earlier dropping as much as 1.9%.

Earlier in the week, a steep slide in commodities, oil and other high-yielding assets saw the dollar strengthen broadly as traders sought safe harbor from volatile markets.

Risk appetite also waned amid uncertainty over whether Greece would need to receive further financial assistance, beyond the EUR110 billion bailout granted a year ago.

Next week, week the U.S. is to publish government data on housing and employment while the Federal Reserve is to publish the minutes of its most recent policy meeting. Meanwhile, Canada is to publish official data on consumer prices and retail sales.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.

Monday, May 16

The Chairman of the Federal Reserve Ben Bernanke is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy. The U.S. is also to publish government data on the balance of domestic and foreign investment as well as data on manufacturing activity in New York state.

In addition, Canada is to publish official data on manufacturing sales, a leading indicator of economic health while Bank of Canada Governor Mark Carney is to speak.

Tuesday, May 17

The U.S. is to publish official data on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The country is also to publish government reports on the capacity utilization rate and industrial production.

Elsewhere, Canada is to publish official data on foreign security purchases which is directly linked to currency demand.

Wednesday, May 18

The Federal Reserve is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The U.S. is also to publish government data on crude oil stockpiles. This data can be a big market mover for the Canadian dollar due to the volume of Canadian oil exports.

Also Wednesday, Canada is to publish an index of leading economic indicators, designed to predict the future direction of the economy, as well as data on wholesale sales, a leading indicator of consumer spending.

Thursday, May 19

The U.S. is to publish its weekly report on initial jobless claims as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

Friday, May 20

Canada is to round up the week with official data on consumer price inflation, which accounts for a majority of overall inflation as well as a report on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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