By FXEmpire.com
Analysis and Recommendations:
The USD/CAD is trading at 1.0156 after Fed Chief Bernanke today sketched out for members of Congress the weaker economic outlook, and stressed that the central bank is prepared to take further action to try to give the recovery a jolt. In testimony prepared for the Senate Banking Committee as part of his twice-per-year report on Fed monetary policy issues, Bernanke said that the reduction in the unemployment rate in coming months seems likely to be “frustratingly slow.” Bernanke urged Congress to move right away to address the looming fiscal cliff, saying it threatened the recovery. He said that the European debt crisis was also a significant threat. The Fed chairman gave no indication outside of what was provided in the June FOMC minutes of any action or consideration, disappointing markets.
The BoC today, maintained current rates and policy. Their statement included “Global growth prospects have weakened since the Bank’s April Monetary Policy Report (MPR). While the economic expansion in the United States continues at a gradual but somewhat slower pace, developments in Europe point to a renewed contraction. In China and other emerging economies, the deceleration in growth has been greater than anticipated, reflecting past policy tightening and weaker external demand. This slowdown in global activity has led to a sizeable reduction in commodity prices, although they remain elevated. The combination of increasing global excess capacity over the projection horizon and reduced commodity prices is expected to moderate global inflationary pressures. Global financial conditions have also deteriorated since April, with periods of considerable volatility. The Bank’s base case projection assumes that the European crisis will continue to be contained, although this assumption is subject to downside risks.
While global headwinds are restraining Canadian economic activity, domestic factors are expected to support moderate growth in Canada. The Bank expects the economy to grow at a pace roughly in line with its production potential in the near term, before picking up through 2013. Consumption and business investment are expected to be the primary drivers of growth, reflecting very stimulative domestic financial conditions. However, their pace will be influenced by external headwinds, notably the effects of lower commodity prices on Canadian incomes and wealth, as well as by record-high household debt. Housing activity is expected to slow from record levels. Government spending is not projected to contribute to growth in 2012 and to contribute only modestly thereafter, in line with plans to consolidate spending by federal and provincial governments. Canadian exports are projected to remain below their pre-recession peak until the beginning of 2014, reflecting the dynamics of foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.”
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 Reported on July 17, 2012 actual v. forecast
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul. 17 |
AUD |
Monetary Policy Meeting Minutes |
|||
|
GBP |
Core CPI (YoY) |
2.1% |
2.3% |
2.2% |
|
|
GBP |
CPI (YoY) |
2.4% |
2.8% |
2.8% |
|
|
GBP |
CPI (MoM) |
-0.4% |
-0.1% |
-0.1% |
|
|
EUR |
German ZEW Economic Sentiment |
-19.6 |
-20.0 |
-16.9 |
|
|
EUR |
ZEW Economic Sentiment |
-22.3 |
-28.0 |
-20.1 |
|
|
GBP |
BoE Gov King Speaks |
||||
|
USD |
Core CPI (MoM) |
0.2% |
0.2% |
0.2% |
|
|
USD |
CPI (MoM) |
0.0% |
-0.1% |
-0.3% |
|
|
Manufacturing Sales (MoM) |
-0.40% |
1.00% |
-1.10% |
||
|
USD |
CPI (YoY) |
1.7% |
1.6% |
1.7% |
|
|
USD |
Core CPI (YoY) |
2.2% |
2.2% |
2.3% |
|
|
CAD |
Interest Rate Decision |
1.00% |
1.00% |
1.00% |
|
|
USD |
TIC Net Long-Term Transactions |
55.0B |
45.7B |
27.2B |
|
|
USD |
Industrial Production (MoM) |
0.4% |
0.3% |
-0.2% |
|
|
USD |
Fed Chairman Bernanke Testifies |
Upcoming Economic Events that affect the CAD and USD
|
Date |
Time |
Currency |
Event |
Previous |
|
Jul 18 |
12:30 |
USD |
Building Permits |
0.78M |
|
12:30 |
USD |
Housing Starts |
0.71M |
|
|
14:30 |
CAD |
BOC Monetary Policy Report |
||
|
14:30 |
USD |
Crude Oil Inventories |
-4.7M |
|
|
15:15 |
CAD |
BOC Press Conference |
||
|
Jul 19 |
12:30 |
CAD |
Wholesale Sales m/m |
1.5% |
|
12:30 |
USD |
Unemployment Claims |
||
|
14:00 |
USD |
Existing Home Sales |
4.55M |
|
|
14:00 |
USD |
Philly Fed Manufacturing Index |
-16.6 |
|
|
Jul 20 |
12:30 |
CAD |
CPI m/m |
-0.1% |
Click here for updated USD/CAD News.
Originally posted here
