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 closed the week at 1.0247. The CAD had a lot of difficult combating the strength of the USD after risk aversion shifted from gold back to the USD after the disappointing FOMC statements.
Crude Oil also tumbled to trade below the 80.00 price level which is a drag on the CAD. Surging crude output in the U.S. offsets the reversal of the Seaway pipeline, pressuring WTI prices to the lowest levels since November.
The Department of Energy reported this morning that in the week ending May 18, U.S. crude oil inventories increased by 0.9 million barrels, gasoline inventories decreased by 3.3 million barrels, distillate inventories decreased by 0.3 million barrels and total petroleum inventories increased by 1.1 million barrels.
Canada faces high but very concentrated data risk next Friday when the April GDP report lands. There is high two-tail risk on the report as what we know about advance indicators is mixed, and so is how technical distortions trade off on one another. Our base case is a 0.2% m/m rise and consensus estimates range from 0.1% to 0.3% which is so tight that it may turn out to understate the two tail risks. We know that retail sales and manufacturing shipments took it on the chin during the month, but wholesale trade and housing were up (mostly due to lower-value-added multis). Also, despite a large 58k job gain during the month that was mostly in full-time jobs, aggregate hours worked were flat which would ordinarily be a warning signal to the downside since GDP equals hours worked times labor productivity. Utilities are a wild card in that unusually warm weather may have lowered heating activity but this downside risk may be offset by earlier than-usual cooling demand. It’s how the lifting of distortions on potash output versus temporary shutdowns
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 June 19-22, 2012 actual v. forecast
|
Date |
Time |
Currency |
Importance |
Event |
Actual |
Forecast |
Previous |
|
Jun. 19 |
02:30 |
AUD |
Monetary Policy Meeting Minutes |
||||
|
10:00 |
EUR |
German ZEW Economic Sentiment |
-16.9 |
4.0 |
10.8 |
||
|
Jun. 20 |
09:30 |
GBP |
Claimant Count Change |
8.1K |
-3.0K |
-12.8K |
|
|
17:30 |
USD |
Interest Rate Decision |
0.25% |
0.25% |
0.25% |
||
|
19:15 |
USD |
Fed Chairman Bernanke Speaks |
|||||
|
23:45 |
NZD |
GDP (QoQ) |
1.1% |
0.5% |
0.4% |
||
|
Jun. 21 |
09:30 |
GBP |
Retail Sales (MoM) |
1.4% |
1.2% |
-2.4% |
|
|
13:30 |
CAD |
Core Retail Sales (MoM) |
-0.3% |
0.2% |
0.3% |
||
|
13:30 |
USD |
Initial Jobless Claims |
387K |
380K |
389K |
||
|
15:00 |
USD |
Existing Home Sales |
4.55M |
4.57M |
4.62M |
||
|
Jun. 22 |
09:00 |
EUR |
German Ifo Business Climate Index |
105.3 |
105.9 |
106.9 |
|
|
13:30 |
CAD |
Core CPI (MoM) |
0.2% |
0.3% |
0.4% |
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 and US Markets
|
Date |
Time |
Currency |
Event |
Previous |
|
Jun 25 |
14:00 |
USD |
New Home Sales |
343K |
|
Jun 26 |
13:00 |
USD |
S&P/CS Composite-20 HPI y/y |
-2.6% |
|
14:00 |
USD |
CB Consumer Confidence |
64.9 |
|
|
Jun 27 |
12:30 |
USD |
Durable Goods Orders m/m |
0.2% |
|
14:00 |
USD |
Pending Home Sales m/m |
-5.5% |
|
|
14:30 |
USD |
Crude Oil Inventories |
||
|
Jun 28 |
12:30 |
USD |
Unemployment Claims |
|
|
12:30 |
USD |
Final GDP q/q |
1.9% |
|
|
Jun 29 |
12:29 |
CAD |
GDP m/m |
0.1% |
|
12:30 |
CAD |
RMPI m/m |
-2.0% |
|
|
12:30 |
USD |
Core PCE Price Index m/m |
0.1% |
|
|
12:30 |
USD |
Personal Spending m/m |
0.3% |
|
|
13:45 |
USD |
Chicago PMI |
52.7 |
|
|
13:55 |
USD |
Revised UoM Consumer Sentiment |
74.1 |
Upcoming Government Bond Auctions
Date Time Country
Jun 25 09:10 Norway
Jun 25 09:30 Germany
Jun 25 10:00 Belgium
Jun 25 15:30 Italy
Jun 26 00:30 Japan
Jun 26 08:30 Holland
Jun 26 08:30 Spain
Jun 26 09:10 Italy
Jun 26 09:30 UK
Jun 26 14:30 UK
Jun 26 17:00 US
Jun 27 09:10 Italy
Jun 27 09:10 Sweden
Jun 27 17:00 US
Jun 28 09:10 Italy
Jun28 17:00 US
Click here to read USD/CAD Technical Analysis.
Originally posted here
