Forex - USD/CAD weekly outlook: May 12 - 16

U.S. dollar rebounds vs. Canadian dollar after weak Canadain jobs data

Investing.com - The U.S. dollar strengthened against the Canadian dollar on Friday, rebounding from four-month lows after data showed that the Canadian economy unexpectedly shed jobs in April.

USD/CAD was at 1.0897 late Friday, up 0.62% for the day, after falling as low as 1.0813 in the previous session. For the week, the pair was still down 0.55%.

The pair was likely to find support at 1.0813 and resistance at 1.0960.

The Canadian dollar weakened after Statistics Canada reported that the economy shed 28,900 jobs in April, confounding expectations for jobs growth of 12,000.

The unemployment rate remained unchanged at 6.9%, in line with expectations but the labor force participation rate, which measures those still actively looking for work, ticked down to 66.1% in April from 66.2% the previous month.

The decline in employment was the largest since December 2013.

The weak data added to concerns over the prospect of weaker-than-expected economic growth in the second quarter and underlined expectations that the Bank of Canada will keep rates on hold for longer.

The U.S. dollar weakened against the other major currencies earlier in the week after Federal Reserve Chair Janet Yellen struck a dovish tone on the economy during testimony to the Joint Economic Committee of Congress on Wednesday.

Ms. Yellen said that a high degree of monetary accommodation remains warranted given the slack in the economy.

The Fed chief also said the bank expects economic growth to accelerate this year despite the slowdown in the first quarter but warned that the recent housing market slowdown "could prove more protracted than currently expected."

In the week ahead, the data calendar for Canada is light so investors will be looking ahead to U.S. reports on retail sales, consumer prices and consumer sentiment.

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

Monday, May 12

The U.S. is to publish data on the federal budget balance.

Tuesday, May 13

The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as reports on import prices and business inventories.

Wednesday, May 14

The U.S. is to release data on producer price inflation.

Thursday, May 15

Canada is to release a report on manufacturing sales.

The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

Canada is to publish data on foreign securities purchases.

The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.