USD/CAD Fundamental Analysis July 16, 2012, Forecast

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Analysis and Recommendations:

The USD/CAD is trading at 1.0168 in the early part of the US session.  Domestic data has been relatively strong and risk aversion, as measured by either the VIX or currency volatility, remains low, typically positive for CAD. In addition, the outlook for the US, somewhat compromised by a weak ISM and employment report but on a relative basis still brighter than many has helped not just CAD.

The CAD is facing a barrage of eco data beginning on Monday the 16th. Markets will be watching to see if there are any developments to support the CAD.

There are several near-term risks to a strong CAD – however in the imminent future we are concerned that CAD might have gotten ahead of itself. This Tuesday (July 17th), the BoC is expected to leave interest rates on hold at 1.0%; however the tone of the statement will prove particularly important. Developments since June 5th (the last meeting) include: tighter mortgage and housing rules in Canada, a 2% rally in CAD, an escalation in the European crisis and a dovish tone from most central banks. In this environment, we would expect the hawkish BoC tone to soften, which risks weighing temporarily on CAD.

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 July 13, 2012 actual v. forecast

Date

Time

 

Currency

 

Importance

 

Event

Actual

 

Forecast

 

Previous

 

 

Jul. 13

03:00

 

CNY

 

 

 

Chinese Fixed Asset Investment (YoY) 

20.4%

 

20.1% 

 

20.1% 

 

 

 

03:00

 

CNY

 

 

 

Chinese GDP (YoY) 

7.6%

 

7.6% 

 

8.1% 

 

 

 

03:00

 

CNY

 

 

 

Chinese Industrial Production (YoY) 

9.5%

 

9.8% 

 

9.6% 

 

 

 

03:00

 

CNY

 

 

 

Chinese Retail Sales (YoY) 

13.7%

 

13.5% 

 

13.8% 

 

 

 

05:30

 

JPY

 

 

 

Industrial Production (MoM) 

-3.4%

 

-3.1% 

 

-3.1% 

 

 

 

08:15

 

CHF

 

 

 

PPI (MoM) 

-0.3%

 

-0.4% 

 

-0.2% 

 

 

 

10:30

 

EUR

 

 

 

Italian 10-Year BTP Auction 

5.82%

 

 

 

6.19% 

 

 

 

13:30

 

USD

 

 

 

Core PPI (MoM) 

2.0% 

 

0.2% 

 

0.2% 

 

 

 

13:30

 

USD

 

 

 

PPI (MoM) 

1.0% 

 

-0.5% 

 

-1.0% 

 

 

 

14:55

 

USD

 

 

 

Michigan Consumer Sentiment 

 

 

73.4 

 

73.2 

   

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

 Event

Previous

Jul 16

12:30

CAD

Foreign Securities Purchases

10.20B

12:30

USD

Retail Sales m/m

-0.2%

12:30

USD

Empire State Manufacturing Index

2.3

14:00

USD

Business Inventories m/m

0.4%

Jul 17

9:15

ALL

G7 Meetings

 

12:30

CAD

Manufacturing Sales m/m

-0.8%

12:30

USD

CPI m/m

-0.3%

13:00

CAD

BOC Rate Statement

 

13:00

CAD

Overnight Rate

1.00%

13:00

USD

TIC Long-Term Purchases

25.6B

13:15

USD

Industrial Production m/m

-0.1%

Jul 18

12:30

USD

Building Permits

0.78M

12:30

USD

Housing Starts

0.71M

14:30

CAD

BOC Monetary Policy Report

 

14:30

USD

Crude Oil Inventories

-4.7M

15:15

CAD

BOC Press Conference

 

Jul 19

12:30

CAD

Wholesale Sales m/m

1.5%

12:30

USD

Unemployment Claims

 

14:00

USD

Existing Home Sales

4.55M

14:00

USD

Philly Fed Manufacturing Index

-16.6

Jul 20

12:30

CAD

CPI m/m

-0.1%

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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