By FX Empire.com
Economic Events
Major Economic Reports due this week. Please refer to the daily reports for explaination and forecast
US Markets closed on Monday for Presidents Day Holiday
|
Feb. 21 |
00:30 |
AUD |
Monetary Policy Meeting Minutes |
|
13:30 |
Core Retail Sales (MoM) | ||
|
Feb. 22 |
09:30 |
GBP |
MPC Meeting Minutes |
|
15:00 |
USD |
Existing Home Sales | |
|
Feb. 23 |
09:00 |
EUR |
German Ifo Business Climate Index |
|
13:30 |
USD |
Initial Jobless Claims | |
|
Feb. 24 |
07:00 |
EUR |
German GDP (QoQ) |
|
09:30 |
GBP |
GDP (QoQ) | |
|
15:00 |
USD |
New Home Sales |
USD/CAD Weekly Fundamental Analysis February 20-24, 2012, Forecast
Historical:
Highest: 1.0842 CAD on 01 Nov 2009.
Average: 1.0147 CAD over this period.
Lowest: 0.9435 CAD on 26 Jul 2011.
Rule:
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%.
Trading Ideas
1) if you believe the price of oil will keep rising, it might be a good strategy to buy the Canadian dollar because it’s 81% positive correlation to oil over the past years.
2) Since the USD/CAD pair tends to be highly correlated to oil, it might be a good idea to compare both Canadian dollar and oil charts in order to predict future moves, if for example oil breaks above an important resistance level and USD/CAD didn’t break resistance level yet, the USD/CAD is very likely to break above also. This illustrates how oil tends to lead the move ahead of USD/CAD.
Analysis and Recommendation:
The USD/CAD is trading at 0.9972. This pair just went along for the ride this week. Reacting to Greek news.. over the on again off again deal that has taken center stage all week, developing into an exciting new screen play, with scandals in Germany, accusations and innuendo flying from Berlin to Athens.
New players coming and going, new rumors, statements and news causing drastic reactions from investors. As the USD moved so did this pair. Ignoring improved economic data from the US and releases in Canada.
US markets are closed on Monday for the Presidents Day Holiday
Strength
- Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march. Merkel and Monti assure the markets.
- German ZEW investor confidence figure rises to best since April
- Initial Jobless Claims fall to lowest since 2008 at 348k, well below estimates of 365k
- Philly and NY manufacturers surveys up but components mixed as headline #’s are not sum of parts
- Housing starts continue to grow for multi-units (apt/condo)
- NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
- India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
- Australia central bank surprises with a hold on interest rates
- UK announces new round of QE
- Australia and NZ have positive economic reports
- China reduces bank reserves
- ECB deposit facility falls
- Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE
Weakness
- Greek saga never ending, ECB wants special treatment old bond new bond swap
- Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
- Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
- Singapore confirms Jan estimate of Q4 GDP contraction
- Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
- Chinese FDI in Jan falls .3%, 3rd month in a row of declines
- US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
- CPI rate of change a below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.
Economic Highlights Feb 13-17 actual v. forecast
|
Feb. 14 |
JPY |
Interest Rate Decision |
0.10% |
0.10% |
0.10% |
|
JPY |
BoJ Press Conference | ||||
|
EUR |
German ZEW Economic Sentiment |
5.4 |
-11.6 |
-21.6 |
|
|
GBP |
BOE Inflation Letter | ||||
|
USD |
Core Retail Sales (MoM) |
0.7% |
0.6% |
-0.5% |
|
|
USD |
Retail Sales (MoM) |
0.4% |
0.8% |
0.0% |
|
|
Feb. 15 |
EUR |
German GDP (QoQ) |
-0.2% |
-0.3% |
0.6% |
|
GBP |
Claimant Count Change |
6.9K |
3.2K |
1.9K |
|
|
GBP |
BoE Inflation Report | ||||
|
GBP |
BoE Gov King Speaks | ||||
|
USD |
FOMC Meeting Minutes | ||||
|
Feb. 16 |
USD |
Initial Jobless Claims |
348K |
364K |
361K |
|
USD |
Fed Chairman Bernanke Speaks | ||||
|
Feb. 17 |
GBP |
Retail Sales (MoM) |
0.9% |
-0.2% |
0.6% |
|
CAD |
Core CPI (MoM) |
0.2% |
0.1% |
-0.5% |
|
|
USD |
Core CPI (MoM) |
0.2% |
0.3% |
0.1% |
|
|
USD |
CPI (MoM) |
0.2% |
0.3% |
0.0% |
Sovereign Bond Auction Schedule
Feb 20-24 n/a UK 0.375% 2062 I/L Gilt syndication
Feb 20 10:10 Norway Nok 3bn 4.5% May 2019 DSL
Feb 20 10:10 Slovakia Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds
Feb 21 09:30 Spain 3 & 6M T-bill auction
Feb 21 15:30 UK Details gilt auction on Mar 01
Feb 21 18:00 US Auctions 2Y Notes
Feb 22 10:10 Sweden Nominal bond auction
Feb 22 10:30 Germany Eur 5.0bn Mar 2014 Schatz
Feb 22 16:30 Italy Details CTZ/BTPei on Feb 24 & BOT on Feb 27
Feb 22 18:00 US Auctions 5Y Notes
Feb 23 10:10 Sweden Sek 0.75bn I/L bond auction
Feb 23 16:30 Italy Details BTP/CCTeu on Feb 28
Feb 23 18:00 US Auctions 7Y Notes
Feb 24 10:10 Italy Auctions CTZ/BTP
Originally posted here
