By FXEmpire.com
USD/CAD Weekly Fundamental Analysis March 26-30, 2012, Forecast
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%.
Analysis and Recommendation:
The USD/CAD ended the week at 0.9978 as the USD lost strength after a negative housing report on Friday. Earlier in the week, official data showed that Consumer price inflation in Canada rose less-than-expected to a seasonally adjusted 0.4% last month from 0.4% in the preceding month. Analysts had expected Canadian consumer price inflation to rise 0.5% last month.
The pair broke through to 1.0035 as the USD was at it strongest before retreating. This week we see a lot of data from the US, but little to support the CAD, although Canada being a major exporter of oil to the US should have seen some positive economic growth with oil maintaining above 100.00usd
This week begins the end of the month reporting cycle, highlighted by fourth quarter GDP data is due in the US. British GDP figures are also due, as well as current account numbers
On Monday, the US pending home sales index for February is set for release. Economists are expecting the date to show a 1% in sales for the month.
Monday also brings a speech from US Federal Reserve chairman Ben Bernanke to the National Association for Business Economics economic policy conference.
The Dallas Federal Reserve manufacturing survey is also due.
In the United Kingdom, nationwide housing prices data for February is expected.
Tuesdaybrings consumer confidence data for March in the US, as well as the Standard & Poors-Case Shiller home price index for January. Analysts are tipping confidence to have fallen by 0.3 points to 70.5 in March.
The Richmond Federal Reserve manufacturing index for March will also be released.
In the UK, third quarter GDP data is due. Current account figures for the fourth quarter are also on tap, along with total business investment data for the same period. Wrapping up a busy day, the March CBI distributive trades survey is awaited.
Wednesday sees the release of US durable goods orders data for February. Orders are expected to have risen 2.5 per cent in the month. Also the weekly Energy Information Administration petroleum status report is due.
Elsewhere, European Monetary Union money supply data for February is due.
Thursdaybrings highly anticipated US GDP data for the fourth quarter. Economists are predicting the figures will show the US economy grew around 3 per cent during the period.
Real personal consumption expenditures and gross domestic purchases price index for the quarter will also be released.
Also weekly US jobless claims figure are due.
In the UK, Gfk consumer confidence for March will be released, alongside consumer credit data for February.
Index of services figures for the three months to February is awaited, along with mortgage approvals data for the month. M4 Money Supply for February is also on tap.
US personal income and outlays data for February is awaited on Friday, as well as consumer sentiment figures. Economists are tipping spending to have lifted 0.6 per cent in the period, while income is expected to have grown 0.4 per cent.
The Chicago purchasing managers index for March is also on tap, alongside the Michigan Consumer Sentiment Index for the month.
The European Banking Authority is expected to release a consultation paper on reporting large exposures.
Last week’s highlights from around the globe:
The good:
Initial Jobless Claims fall to 348k, the lowest since Mar ’08 a drop of 5000 under forecast.
Multifamily housing starts jump again in Feb and permits rise to the most since Oct ’08.
Greek CDS payments clear smoothly. Greek Default date passes.
Portuguese 10 yr bond yield falls 108 bps in spite of concerns with it post Greece.
French business confidence rises 3 pts to a 4 month high
The not so bad:
China slowdown concerns grow.
HSBC preliminary manufacturers fall to 48.1 from 49.6, 5th month below 50.
More cities report home price decreases and fewer report home price increases.
BHP and Rio express reservations over pace of Chinese growth.
Official at China Assoc of Auto Mfr’s says auto sales likely to miss their estimates in 2012.
China raises gasoline and diesel prices.
Spanish and Italian 10 yr yields rise almost 20 bps on the week.
German and French manufacturers PMI fall back below 50.
Euro zone manufacturers and services composite index unexpectedly falls to 48.7 from 49.3.
UK retail sales below estimates and consumer confidence falls.
Feb US New Home Sales unexpectedly drop to 313k, a still anemic level and months’ supply up a touch to 5.8 from 5.7.
Existing Home Sales month’s supply rises to 6.4 from 6.0. Feb sales light but Jan revised up.
NAHB home builder survey unchanged at 28 vs. estimate of 30.
Single family housing starts flat, seeing no weather induced improvement.
No News is Good News — This week on the economic calendar in Canada
|
Mar. 30 |
13:30 |
CAD |
GDP (MoM) |
Historical:
Highest: 1.0842 CAD on 01 Nov 2009.
Average: 1.0147 CAD over this period.
Lowest: 0.9435 CAD on 26 Jul 2011.
Government Bond Auctions (this week)
Mar 26 09:10 Norway Nok 3.0bn NST 474 3.75% May 2021 Bond
Mar 26 10:30 Germany Eur 3.0bn new Mar 2013 Bubill
Mar 26 15:30 Italy Details BTP/CCTeu auction on Mar 29
Mar 27 09:10 Italy CTZ/BTPei auction
Mar 27 08:30 Spain 3 & 6M T-bill auction
Mar 27 17:00 US Auctions 2Y Notes
Mar 28 09:10 Italy BOT auction
Mar 28 17:00 US Auctions 3Y Notes
Mar 29 09:10 Italy BTP/CCTeu auction
Mar 29 17:00 US Auctions 7Y Notes
Originally posted here
