USD/CAD Fundamental Analysis – Forecast for the week of September 19, 2016

By:

Published: Sep 17, 2016, 07:01 UTC

The USD/CAD had a tough week as oil and gold tumbled and the dollar soared weighing heavily on the Loonie. The currency closed the week at 1.3213 with the

USD/CAD Fundamental Analysis – Forecast for the week of September 19, 2016

The USD/CAD had a tough week as oil and gold tumbled and the dollar soared weighing heavily on the Loonie. The currency closed the week at 1.3213 with the pair gaining 1.26% for the week and remains a strong buy moving into the new week. The pair is down 4.54% on a YTD basis. CAD is down 0.4% from Thursday’s close and weakening into the NA open, threatening a break to fresh lows on the back of continued weakness in oil prices.

The broader tone is one of risk aversion and the USD is strengthening broadly, leaving CAD vulnerable to further downside. Sentiment is dominant, measures of implied CAD volatility are elevated, and risk reversals have been testing levels last seen in late June in the period surrounding the UK referendum. CAD is completely disconnected from considerations of relative central bank policy, the 2Y U.S.-Canada yield spread down nearly 10bpts from its late August high just under 25bpts. Policy risks are likely to escalate into next week as we look to BoC Gov. Poloz’ September 20 speech titled ‘Living with lower for longer’, scheduled just ahead of the September 21 FOMC

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

This Week’s Economic Events That You Should Be Monitoring:

Date	Country	Name	Volatility	Previous
9/20/2016	AUD	RBA Meeting’s Minutes	3
9/20/2016	CAD	BoC Governor Poloz	3
9/21/2016	AUD	Mid-Year Economic Outlook	3
9/21/2016	JPY	BoJ Interest Rate Decision	3	-0.1
9/21/2016	JPY	BoJ Monetary Policy Statement	3
9/21/2016	JPY	BoJ Press Conference	3
9/21/2016	USD	FOMC Economic Projections	3
9/21/2016	USD	Fed’s Monetary Policy Statement	3
9/21/2016	USD	Fed Interest Rate Decision	3	0.5
9/21/2016	USD	FOMC Press conference	3
9/21/2016	NZD	RBNZ Interest Rate Decision	3	2
9/22/2016	EUR	ECB President Draghi’s Speech	3
9/23/2016	AUD	RBA’s Governor Lowe Speech	3