By FXEmpire.com
Analysis and Recommendations:
The USD/CAD benefited today from the few brave investors who went looking for a bit more risk, and moved to commodity currencies. With the euro suffering from the plague and investors shedding everything European, those looking for a bit more excitement are turning to the CAD,NZD and AUD, which they are able to pickup cheaply as the USD has pushed all the currencies to recent lows.
Three lessons from previous episodes of risk: 1) Spikes in risk aversion are short averaging just a month 2) Retracement after a spike in risk aversion takes much longer than the initial spike. 3) Spikes in risk aversion interrupt a trend, but do not permanently change the trend. What this implies for USDCAD today: 1) If we do not break out of the range in vol, we would see USDCAD testing 1.02 as the upper limit for near-term traders. 2) If we do break out of the range in vol, USDCAD is more likely to spike up to 1.08, than to repeat the experience of 2008, which would imply a spike up to 1.2400. 3) Any spike in risk aversion is likely to be short, with retracement taking more time
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 up to the data analysis and information in our weekly reports.
Economic Data May 17, 2012 actual v. forecast
|
May 17 |
JPY |
GDP (QoQ) |
1.0% |
0.9% |
-0.2% |
|
JPY |
GDP Price Index (YoY) |
-1.2% |
-1.4% |
-1.8% |
|
|
JPY |
Industrial Production (MoM) |
1.3% |
1.1% |
1.0% |
|
|
CAD |
Foreign Securities Purchases |
-2.08B |
9.34B |
12.54B |
|
|
USD |
Initial Jobless Claims |
370K |
365K |
370K |
|
|
CAD |
Wholesale Sales (MoM) |
0.4% |
0.4% |
1.5% |
|
|
USD |
Continuing Jobless Claims |
3265K |
3235K |
3247K |
|
|
USD |
Philadelphia Fed Manufacturing Index |
-5.8 |
10.0 |
8.5 |
Upcoming Economic Events that affect the CAD and USD
|
May 18 |
13:30 |
CAD |
0.3% |
0.3% |
|
|
13:30 |
CAD |
0.3% |
0.4% |
||
|
13:30 |
CAD |
2.0% |
1.9% |
Government Bond Auctions
Date Time Country
May 21 09:10 Norway
May 21 09:30 Germany
May 21 10:00 Belgium
May 22 08:30 Holland
May 22 08:30 Spain
May 22 17:00 US
May 23 09:10 Sweden
May 23 09:30 Germany
May 23 14:30 Sweden
May 23 17:00 US
May 24 15:30 Italy
May 24 17:00 US
May 25 15:30 Italy
Click here to read USD/CAD Technical Analysis.
Originally posted here
