USD/CAD Fundamental Analysis – for the week of August 22, 2016 -Forecast

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Published: Aug 20, 2016, 07:04 UTC

The USD/CAD saw the Canadian dollar soar this week as oil and gold prices rebounded while the US dollar eased on mixed messages from the Fed. The CAD

USD/CAD Fundamental Analysis – for the week of August 22, 2016 -Forecast

The USD/CAD saw the Canadian dollar soar this week as oil and gold prices rebounded while the US dollar eased on mixed messages from the Fed. The CAD technicals indicate a strong buy this week but common sense indicates to sell on peaks as oil will most likely not remain at its highs. The CAD is trading at 1.2868. The Canadian dollar climbed by half a cent as crude prices extended gains for a sixth straight day, amid a dearth of economic news and continued uncertainty over U.S. interest rates.

Markets analyst Todd Mattina said the value of the greenback has fallen in recent weeks amid a dovish environment, with traders not convinced that the U.S. Federal Reserve will hike interest rates any time soon. Even Wednesday’s release of the latest minutes from the central bank’s July meeting didn’t pump up investor confidence.

Mattina, chief economist at Mackenzie Investments, noted that what’s obvious is that Fed chairwoman Janet Yellen doesn’t want to startle the economy with any major moves.

“What’s clear, given this longer-run framework, is that the pace of raising rates is going to be much more gradual and slow than previously thought,” he said.

“The Fed is looking for confirmation that inflation is really stabilizing, that we’re really seeing the labour market in a tight mode with wage gains gaining pace, and that global financial conditions remain easy before it pulls the trigger and hike rates.”

Despite forecasts for a weak Consumer Price Index (CPI), stickiness in the core rate of inflation may boost the appeal of the loonie and trigger fresh monthly lows in USD/CAD as it encourages the Bank of Canada (BoC) to gradually move away from its easing cycle.

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Week of August 22-25, 2016

Date	Country	Name	Volatility	Previous
8/23/2016	GBP	Inflation Report	3
8/24/2016	EUR	GDP w.d.a (YoY)	3	1.8
8/24/2016	EUR	GBP s.a (QoQ)	3	0.4
8/24/2016	EUR	GDP n.s.a (YoY)	3	3.1