Forex - USD/CAD weekly outlook: July 15 - 19

Investing.com - The U.S. dollar pushed higher against the Canadian dollar on Friday as the greenback regained ground following a selloff earlier in the week after Federal Reserve Chairman Ben Bernanke said the U.S. economy still required monetary stimulus.

USD/CAD hit session highs of 1.0405, before settling at 1.0397, up 0.28% for the day and paring the week’s losses to 1.57%.

The pair is likely to find support at 1.0324, Thursday’s low and a three-week low and resistance at 1.0470, Thursday’s high.

The dollar fell sharply after Ben Bernanke said Wednesday that the Fed will continue to maintain accommodative monetary policy for the foreseeable future, citing low levels of inflation and the high unemployment rate.

Bernanke said the bank will not raise interest rates until the U.S. unemployment rate hits 6.5%.

The comments came after the minutes of the central bank’s June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program.

Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while many others believe the labor market still remains too weak.

Data on Friday showed that U.S. consumer sentiment ticked lower in July, with the University of Michigan’s consumer sentiment index slipping to 83.9 from 84.1 in June, compared to expectations for a reading of 85.0.

Meanwhile, Philadelphia Fed President Charles Plosser said Friday the U.S. central bank should wind down its monetary stimulus program by the end of this year. Elsewhere, St. Louis Fed President James Bullard said the bank should not start tapering asset purchases if inflation remains weak.

In the week ahead, investors will be looking ahead to U.S. data on retail sales, consumer inflation and housing sector activity for indications that the U.S. recovery is on track.

Market participants will also be closely watching the outcome of Wednesday’s Bank of Canada policy meeting, the first under the leadership of new Governor Stephen Poltz, who took over from Mark Carney in June.

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

Monday, July 15

The U.S. is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish the Empire state manufacturing index and a report on business inventories.

Tuesday, July 16

Canada is to publish official data on manufacturing sales, a leading economic indicator.

The U.S. is to release official data on consumer price inflation, industrial production and the capacity utilization rate.

Wednesday, July 17

The BoC is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank is to hold a press conference after the rate announcement.

Canada is to release government data on foreign securities purchases.

The U.S. is to release official data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts. The Federal Reserve is to release its Beige book.

Thursday, July 18

Canada is to produce official data on wholesale sales, a leading indicator of consumer spending.

The U.S. is to release the weekly government report on initial jobless claims and the Philly Fed manufacturing index.

Friday, July 19

Canada is to round up the week with official data on consumer price inflation.