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 continues to move closer to parity ending the week at 1.0012. There was little in the way of supportive data from Canada and the Looney responded to the value of the USD and to US economic indications. The economy of Canada is very dependent on the US and oil exports.
|
Date |
Open |
High |
Low |
Change % |
|
|
Aug 03, 2012 |
1.0012 |
1.0073 |
1.0076 |
0.9980 |
-0.61% |
|
Aug 02, 2012 |
1.0073 |
1.0049 |
1.0085 |
1.0003 |
0.25% |
|
Aug 01, 2012 |
1.0048 |
1.0034 |
1.0057 |
1.0004 |
0.14% |
|
Jul 31, 2012 |
1.0034 |
1.0015 |
1.0043 |
1.0004 |
0.19% |
|
Jul 30, 2012 |
1.0015 |
1.0044 |
1.0054 |
1.0014 |
-0.29% |
Markets are closed in Canada on Monday and there is very little on the Canadian calendar until late in the week, at which time we might see some action for the Looney.
Canada’s labor force survey for July is due out on August 10, economists expect the unemployment rate to remain stable at 7.2%. The view that Canadian job growth is due to revert to levels consistent with GDP growth after very strong results in March and April while the economy was fairly flat. Job trends in the medium term follow the relationship between employment growth and overall GDP growth known as Okun’s law Full-time private sector jobs growth already started to cool in June (-26k) with all of the overall +7.3k job gains attributable to a surge in public sector hiring (+38.9k) without which the overall payrolls number would have been negative. Generally speaking, Canadian jobs numbers tend to get wonky during the summer months due to the fact that there does not seem to be a predictable monthly seasonality to the mass hiring and firing of private-contract education workers during the summer
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 30 – Jul 3actual v. forecast for the Canadian & US Dollar
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul 31 |
CAD |
GDP m/m |
0.1% |
0.2% |
0.3% |
|
USD |
CB Consumer Confidence |
65.9 |
61.5 |
62.7 |
|
|
Aug 1 |
USD |
ADP Non-Farm Employment Change |
163K |
121K |
172K |
|
USD |
ISM Manufacturing PMI |
49.8 |
50.3 |
49.7 |
|
|
USD |
FOMC Statement |
||||
|
Aug 2 |
USD |
Unemployment Claims |
365K |
375K |
357K |
|
Aug 3 |
USD |
Non-Farm Employment Change |
163K |
101K |
64K |
|
USD |
Unemployment Rate |
8.3% |
8.2% |
8.2% |
|
|
USD |
ISM Non-Manufacturing PMI |
52.6 |
52.1 |
52.1 |
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 7 |
12:30 |
CAD |
Building Permits m/m |
7.4% |
|
14:00 |
CAD |
Ivey PMI |
49.0 |
|
|
Aug 8 |
12:30 |
USD |
Prelim Nonfarm Productivity q/q |
-0.9% |
|
12:30 |
USD |
Prelim Unit Labor Costs q/q |
1.3% |
|
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Aug 9 |
12:15 |
CAD |
Housing Starts |
223K |
|
12:30 |
CAD |
Trade Balance |
-0.8B |
|
|
12:30 |
CAD |
NHPI m/m |
0.3% |
|
|
12:30 |
USD |
Trade Balance |
-48.7B |
|
|
12:30 |
USD |
Unemployment Claims |
||
|
Aug 10 |
12:30 |
CAD |
Employment Change |
7.3K |
|
12:30 |
CAD |
Unemployment Rate |
7.2% |
|
|
12:30 |
USD |
Import Prices m/m |
-2.7% |
|
|
18:00 |
USD |
Federal Budget Balance |
-59.7B |
Upcoming Government Bond Auctions
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Aug 13 09:10 Italy
Aug 13 09:10 Norway
Aug 13 09:30 Germany
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Aug 14 09:10 Italy
Aug 14 09:30 Belgium
Aug 14 14:30 UK
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Aug 16 15:00 US
Click here to read USD/CAD Technical Analysis.
Originally posted here
