USD/CAD Fundamental Analysis August 10, 2012, Forecast

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Analysis and Recommendations:

The USD/CAD remains below parity trading at 0.9920 as the US strengthened after the US trade balance showed a vast improvement and the Canadian trade balance disappointed traders. Housing starts in Canada also reported under forecast. (See chart below)

The negative impact of the spread between Brent and WTI for Canada, the need for Canada to diversify its exports into growth nations and how best to deal with the flow of capital into Canada were discussed by the Governor of the BoC today.

His tone was unchanged from previous interviews and will likely do little to change current market pricing of interest rates in Canada.

The OIS market is now pricing in a 16% chance of an interest rate hike over the next 9months (positive for CAD), a significant change from most of July, where a 20% chance of a rate cut was priced in.

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 August 9, 2012 actual v. forecast

Aug. 09

02:30

 

AUD

 

 

 

Employment Change 

14.0K

 

10.0K 

 

-28.3K 

  

 

02:30

 

AUD

 

 

 

Unemployment Rate 

5.2%

 

5.3% 

 

5.3% 

  

 

02:30

 

CNY

 

 

 

Chinese CPI (YoY) 

1.8%

 

1.7% 

 

2.2% 

 

 

 

02:30

 

CNY

 

 

 

Chinese PPI (YoY) 

-2.9%

 

-2.5% 

 

-2.1% 

 

 

 

02:30

 

CNY

 

 

 

Chinese CPI (MoM) 

0.1%

 

-0.1% 

 

-0.6% 

 

 

 

05:00

 

JPY

 

 

 

Interest Rate Decision 

0.10%

 

0.10% 

 

0.10% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Fixed Asset Investment (YoY) 

20.4%

 

20.5% 

 

20.4% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Industrial Production (YoY) 

9.2%

 

9.8% 

 

9.5% 

 

 

 

06:30

 

CNY

 

 

 

Chinese Retail Sales (YoY) 

13.1%

 

13.7% 

 

13.7% 

 

 

 

09:30

 

GBP

 

 

 

Trade Balance 

-10.1B

 

-8.6B 

 

-8.4B 

 

 

 

13:15

 

CAD

 

 

 

Housing Starts 

208.5K

 

213.0K 

 

222.1K 

  

 

13:30

 

CAD

 

 

 

Trade Balance 

-1.8B

 

-1.0B 

 

-0.9B 

  

 

13:30

 

USD

 

 

 

Trade Balance 

-42.9B

 

-47.5B 

 

-48.0B 

  

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

361K

 

370K 

 

367K 

  

 

13:30

 

USD

 

 

 

Continuing Jobless Claims 

3332K

 

3280K 

 

3279K 

  

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event 

Previous

Aug 10

12:30

CAD

Employment Change

7.3K

 

12:30

CAD

Unemployment Rate

7.2%

 

12:30

USD

Import Prices m/m

-2.7%

 

18:00

USD

Federal Budget Balance

-59.7B

Government Bond Auctions

Date  Time  Country 

Aug 10  10:00  Belgium

Aug 13  09:10  Italy

Aug 13  09:10  Norway

Aug 13  09:30  Germany

Aug 14  09:10  Greece 

Aug 14  09:10  Italy

Aug 14  09:30  Belgium

Aug 14  14:30  UK

Aug 15  09:10  Sweden

Aug 16  09:30  UK

Aug 16  15:00  US

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About:FX Empire Analyst - Barry Norman

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