USD/CAD Fundamental Forecast – August 25, 2016

The USD/CAD traded higher on Wednesday, last trading 1.2942, up 0.0031 or +0.24%. The catalysts behind the strength were increased bets that Fed Chair Janet Yellen will deliver a hawkish speech at the Jackson Hole Wyoming central bankers’ symposium on Friday. Additionally, a surprise build drove crude oil prices lower, putting a drag on the Canadian Dollar.

The commodity-linked Canadian Dollar declined against a firmer U.S. Dollar on Wednesday after oil prices fell more than 1.50%. Crude oil prices sold-off sharply after the U.S. Energy Information Administration reported an unexpected increase in stockpiles. This news revived worries about the global supply glut.

In other news, the Alberta government raised its 2016-17 budget deficit forecast to C$10.9 billion on Tuesday. The government blamed the massive wildfire that ripped through the province’s oil sands hub of Fort McMurray in May for the increase in the deficit.

The daily chart pattern indicates a shift in momentum to the upside that is likely to continue if crude oil prices continue to weaken and the dollar strengthens. However, these are highly speculative positions because crude oil can turn higher at any time if OPEC and Non-OPEC countries agree to some kind of production freeze, or if Yellen delivers a dovish message on Friday. On the other hand there is a big payoff if crude returns to lower levels seen earlier in the month and Yellen signals at least one rate hike before the end of the year.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, August 25, 2016

Government Bond Auctions

Date/Time Country Type

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon