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 opened the week at 1.0140 and closed the week at 1.0128 as the CAD gained momentum over the USD. Canada benefited from the rise in oil prices and over speculation the BoC is getting closer to reducing interest rates again. The US was weak most of the week on comments from Fed Chairman Bernanke during his testimony before Congress. He dashed hope of additional stimulus and painted a bleak view of the US economy, but saw a glimmer of hope and a bit of growth and forward movement.
His prime worry was ongoing problems in the EU and negative eco data from China which could hurt the US’s fragile recovery.
|
Date |
Open |
High |
Low |
Change % |
|
|
Jul 20, 2012 |
1.0128 |
1.0078 |
1.0131 |
1.0070 |
0.50% |
|
Jul 19, 2012 |
1.0078 |
1.0100 |
1.0107 |
1.0067 |
-0.22% |
|
Jul 18, 2012 |
1.0100 |
1.0120 |
1.0149 |
1.0097 |
-0.20% |
|
Jul 17, 2012 |
1.0120 |
1.0151 |
1.0170 |
1.0119 |
-0.31% |
|
Jul 16, 2012 |
1.0151 |
1.0140 |
1.0173 |
1.0140 |
0.11% |
Canadian markets will be relatively quiet by way of domestic developments next week, and will otherwise follow the broad global tone. There could be one exception. Canada releases retail sales for the month of May on Tuesday. Economists are expecting a solid gain in headline sales given a rise in auto sales and strength at large retailers, but this would only largely negate the contraction in sales that occurred over the prior month if it comes true. Retail sales are also important because they are the last major indicator we’ll be using to round out our May GDP call in advance of the following week’s release. Canada also releases the Teranet repeat sales indicator for house prices on Wednesday, and the country auctions 10s on Wednesday
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 July 16 – 20 actual v. forecast for the Canadian & US Dollar
|
Date |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jul 16 |
CAD |
Foreign Securities Purchases |
26.11B |
13.51B |
10.16B |
|
USD |
Core Retail Sales m/m |
-0.4% |
0.1% |
-0.4% |
|
|
USD |
Empire State Manufacturing Index |
7.4 |
3.9 |
2.3 |
|
|
USD |
Business Inventories m/m |
0.3% |
0.2% |
0.3% |
|
|
Jul 17 |
CAD |
Manufacturing Sales m/m |
-0.4% |
0.7% |
-1.1% |
|
USD |
Core CPI m/m |
0.2% |
0.2% |
0.2% |
|
|
USD |
TIC Long-Term Purchases |
55.0B |
45.7B |
27.2B |
|
|
CAD |
Overnight Rate |
1.00% |
1.00% |
1.00% |
|
|
USD |
Capacity Utilization Rate |
78.9% |
79.2% |
78.7% |
|
|
USD |
Industrial Production m/m |
0.4% |
0.4% |
-0.2% |
|
|
Jul 18 |
USD |
Building Permits |
0.76M |
0.77M |
0.78M |
|
USD |
Housing Starts |
0.76M |
0.74M |
0.71M |
|
|
USD |
Crude Oil Inventories |
-0.8M |
0.5M |
-4.7M |
|
|
Jul 19 |
CAD |
Wholesale Sales m/m |
0.9% |
0.2% |
1.2% |
|
USD |
Unemployment Claims |
386K |
367K |
352K |
|
|
USD |
Existing Home Sales |
4.37M |
4.64M |
4.62M |
|
|
USD |
Philly Fed Manufacturing Index |
-12.9 |
-7.9 |
-16.6 |
|
|
Jul 20 |
CAD |
Core CPI m/m |
-0.4% |
-0.1% |
0.2% |
Historical:
Highest: 1.0842 CAD on Nov 01, 2009.
Average: 1.0147 CAD over this period.
Lowest: 0.9407 CAD on Jan 26, 2011.
Economic Highlights of the coming week that affect the Canadian & American Markets
|
Date |
Time |
Currency |
Event |
Previous |
|
Jul 24 |
12:30 |
CAD |
Core Retail Sales m/m |
-0.3% |
|
12:30 |
CAD |
Retail Sales m/m |
-0.5% |
|
|
13:00 |
USD |
Flash Manufacturing PMI |
52.5 |
|
|
Jul 25 |
14:00 |
USD |
New Home Sales |
369K |
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Jul 26 |
12:30 |
USD |
Core Durable Goods Orders m/m |
0.7% |
|
12:30 |
USD |
Unemployment Claims |
||
|
14:00 |
USD |
Pending Home Sales m/m |
5.9% |
|
|
Jul 27 |
12:30 |
USD |
Advance GDP q/q |
1.9% |
|
13:55 |
USD |
Revised UoM Consumer Sentiment |
72.0 |
Click here for further USD/CAD Forecast.
Originally posted here
