USD/CAD Fundamental Analysis July 24, 2012, Forecast

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Analysis and Recommendations:

The USD/CAD is trading at 1.0197 against a very strong greenback. On the back of European induced risk aversion, CAD is weak in early US trading, having lost 0.3% since Friday’s close.

There is no Canadian data today, however Friday’s weak inflation data fails to incorporate the upward pressure that rising agricultural prices will put on inflation, something the BoC will be watching closely. On the M and A front, China’s CNOOC Ltd has made a US$17.7bn bid for Canada’s Nexen. The deal appears to be in USD, which will have limited CAD impact; however it highlights international interest in Canadian based assets, which has a medium term positive impact for CAD.

For USDCAD traders, the VIX and FX vol will be important measures to watch. Risk aversion is an important driver of USDCAD upside; any spike in volatility is likely to also cause a temporary spike in USDCAD. The sharp decline in crude oil is also putting pressure on the 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 23, 2012 actual v. forecast

Date

Time

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Jul. 23

01:30

 

TWD

 

 

 

Taiwanese Unemployment Rate 

4.24%

 

4.30% 

 

4.25% 

 

 

 

02:30

 

AUD

 

 

 

PPI (QoQ) 

0.5%

 

0.3% 

 

-0.3% 

 

 

 

10:30

 

EUR

 

 

 

German 12-Month Bubill Auction 

-0.054%

 

 

 

0.019% 

 

 

 

13:30

 

USD

 

 

 

Chicago Fed National Activity 

-0.15

 

 

 

-0.48 

   

 

Upcoming Economic Events that affect the CAD and USD

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

Government Bond Auctions

Date  Time  Country 

Jul 24  08:30  Netherlands

Jul 24  08:30  Spain 

Jul 24  15:30  Italy

Jul 24  17:00  US

Jul 25  09:30  Germany

Jul 25  15:30  Italy

Jul 25  17:00  US

Jul 26  00:30  Japan

Jul 26  09:10  Italy

Jul 27  09:10  Italy

Jul 27  17:00  US

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About: FX Empire Analyst - Barry Norman

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