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USD/CAD Weekly Fundamental Analysis Aug 13-17, 2012, Forecast

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By FXEmpire.com

Introduction: The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds to economic reports within Canada. It has little action against foreign currencies except during major moves or crisis.

The USD/CAD is the single biggest beneficiary of rising oil prices. Canada which is already the biggest exporter of oil to the US will experience a boost to its economy when oil price continue to increase. Therefore, if oil rises the Canadian dollar is likely to follow. Over the past years, the correlation between the Canadian dollar and oil prices has been approximately 81%.

Weekly Analysis and Recommendation:

The USD/CAD tumbled this week to close at 0.9910 as the pair marched right through parity. This pair were out of sync with the rest of the global currencies. The USD picked up momentum towards the end of the week, especially on positive trade balance data, where as the CAD reported well below forecast trade balance and negative housing data. Earlier in the week a surprisingly high IVEY PMI supported the currency. At the end of the week the markets were totally surprised by a very negative jobs release, traders had been expecting the report to come in over forecast.

Date

Last

Open

High

Low

Change %

Aug 10, 2012

0.9910

0.9914

0.9970

0.9906

-0.04%

Aug 09, 2012

0.9914

0.9951

0.9951

0.9910

-0.37%

Aug 08, 2012

0.9951

0.9976

0.9989

0.9937

-0.24%

Aug 07, 2012

0.9975

1.0008

1.0012

0.9963

-0.33%

Aug 06, 2012

1.0008

1.0006

1.0021

0.9984

0.02%

The Canadian dollar seems to be remaining strong on good old sound economics. There are rumors that the SNB is going to be moving some M&A business to Canada, Canada still maintains its AAA credit rating

The combination of weak Chinese exports and a downward revision to the IEA's oil demand outlook has weighted on CAD, with the currency weakening 0.3% since yesterday's close. The IEA's downward revision to oil demand has weighed on oil prices; however for Canada (and CAD) the IEA's $103 H212 forecast for Brent and its estimate that the spread between Brent and WTI will fall from $14 inQ312 to $9 in late 2013 is still supportive of the economy

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week of Aug 6-10 actual v. forecast for the Canadian & US Dollar

Date

Currency

Event

Actual

Forecast

Previous

Aug 7

CAD

Building Permits m/m

-2.5%

-3.5%

7.1%

CAD

Ivey PMI

62.8

52.0

49.0

Aug 8

USD

Prelim Nonfarm Productivity q/q

1.6%

1.5%

-0.9%

USD

Prelim Unit Labor Costs q/q

1.7%

0.5%

1.3%

USD

Crude Oil Inventories

-3.7M

-0.6M

-6.5M

USD

10-y Bond Auction

1.68|2.5

1.46|3.6

Aug 9

CAD

Housing Starts

209K

212K

222K

CAD

Trade Balance

-1.8B

-0.9B

-1.0B

CAD

NHPI m/m

0.2%

0.3%

0.3%

USD

Trade Balance

-42.9B

-47.4B

-48.0B

USD

Unemployment Claims

361K

371K

367K

USD

Mortgage Delinquencies

7.58%

7.40%

Aug 10

CAD

Employment Change

-30.4K

9.6K

7.3K

CAD

Unemployment Rate

7.3%

7.2%

7.2%

USD

Import Prices m/m

-0.6%

0.1%

-2.4%

USD

Federal Budget Balance

-69.6B

-103.0B

-59.7B

Historical: From 2010 to present

Highest: 1.0853 CAD on May 25, 2010.

Average: 1.0090 CAD over this period.

Lowest: 0.9407 CAD on Jan 26, 2011.

Economic Highlights of the coming week that affect the Canadian and American Markets

Date

Time

Currency

Event

Previous

Aug 14

12:30

USD

Core Retail Sales m/m

-0.4%

12:30

USD

PPI m/m

0.1%

12:30

USD

Retail Sales m/m

-0.5%

14:00

USD

Business Inventories m/m

0.3%

Aug 15

12:30

USD

Core CPI m/m

0.2%

12:30

USD

Empire State Manufacturing Index

7.4

13:00

USD

TIC Long-Term Purchases

55.0B

13:15

USD

Capacity Utilization Rate

78.9%

13:15

USD

Industrial Production m/m

0.4%

14:30

USD

Crude Oil Inventories

-3.7M

Aug 16

12:30

CAD

Foreign Securities Purchases

26.11B

12:30

CAD

Manufacturing Sales m/m

-0.4%

12:30

USD

Building Permits

0.76M

12:30

USD

Unemployment Claims

361K

12:30

USD

Housing Starts

0.76M

14:00

USD

Philly Fed Manufacturing Index

-12.9

Aug 17

12:30

CAD

Core CPI m/m

-0.4%

12:30

CAD

CPI m/m

-0.4%

13:55

USD

Prelim UoM Consumer Sentiment

72.3

Click here for updated USD/CAD News.

Originally posted here

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