USD/CAD Fundamental Forecast – August 31. 2016

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Published: Aug 30, 2016, 13:30 UTC

The USD/CAD soared today as the greenback rallied after Stanley Fischer reiterated his comments from Friday, holding tight to the possibility of more than

The USD/CAD soared today as the greenback rallied after Stanley Fischer reiterated his comments from Friday, holding tight to the possibility of more than one rate increase before the end of the year. The Canadian dollar got little help from a small rebound in oil prices while gold dipped today. The moves were all generated by the stronger US dollar. Fischer’s comments are what sent the dollar soaring, as he noted that a hike could take place as early as September, while two rate increases are possible before the end of the year. While the dollar did pull back from its highs on Monday, the basket of currencies is firmer this morning, testing Monday’s highs as well as the 50-day moving average.

Positive US data failed to introduce much volatility to USD/CAD. Monthly personal income was reported to increase 0.4%, while personal spending rose 0.3%, both figures came in line with expectations. The annual PCE price index was reported unchanged at 1.6%. As the Fed’s preferred measure of inflation, the figures were important for rate hike speculators following the hawkish comments heard last week. An unchanged figure, however, has failed to further encourage rate hike speculators. While the Dollar remains firm, the futures market has slightly priced down the probabilities of a rate hike. September odds remained unchanged at 33%, while December odds moved down to 51.7%, down from Friday’s 59.1%.

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August 31, 2016

Country	Event	Volatility	Previous
GBP	Gfk Consumer Confidence	2	-12
JPY	Industrial Production	2	-1.5
JPY	Industrial Production	2	2.3
AUD	HIA New Home Sales	2	8.2
CHF	UBS Consumption Indicator	2	1.34
EUR	Unemployment Rate s.a.	3	6.1
EUR	Unemployment Change	3	-7
EUR	Unemployment	2	11.6
EUR	Unemployment Rate	2	10.1
EUR	Consumer Price Index	3	0.2
EUR	Consumer Price Index – Core	3	0.9
USD	ADP Employment Change	2	179
CAD	Gross Domestic Product Annualized	2	2.4
CAD	Gross Domestic Product	2	-0.6
USD	Chicago Purchasing Managers’ Index	2	55.8
USD	Pending Home Sales	2	1
USD	Pending Home Sales	2	0.2