USD/CAD Fundamental Forecast – July 28, 2016

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Published: Jul 27, 2016, 15:42 UTC

The USD/CAD erased earlier weakness to finish at 1.3202, up 0.0018 or +0.14%. The reversal to the upside was triggered by a steep drop in crude oil

The USD/CAD erased earlier weakness to finish at 1.3202, up 0.0018 or +0.14%. The reversal to the upside was triggered by a steep drop in crude oil futures. Since the Canadian economy is crude oil reliant, the Canadian Dollar weakened on the news.

The Greenback gained on the Loonie after the U.S. Energy Information Administration’s weekly inventories report showed that U.S. commercial crude in storage rose by 1.7 million barrels to a total of 521.1 million barrels in the week through July 22. Traders had priced in an estimate of a 2.3 million barrel draw down.

Earlier in the session, position-squaring ahead of today’s Fed announcement helped push down the USD/CAD. The Fed is expected to leave interest rates unchanged, but could trigger a further rally by the U.S. Dollar if it issues a hawkish statement that indicates a sooner-than-expected rate hike.

Even after a hawkish Fed statement, the Canadian Dollar could feel selling pressure as investors await Friday’s monthly GDP figures. The second quarter was a disappointment and there are serious fundamental issues in Canada which unfortunately fall outside what the government and the central bank have any control over. The Canadian economy has been unable to shake its dependence on energy despite the efforts from the government and the Bank of Canada, so the USD/CAD is likely to continue to be underpinned as long as crude oil prices continue to retreat.

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:

Cur.	Event	Actual	Forecast	Previous
AUD	CPI (YoY) (Q2)	1.0%	1.1%	1.3%
AUD	CPI (QoQ) (Q2)	0.4%	0.4%	-0.2%
AUD	Trimmed Mean CPI (QoQ) (Q2)	0.5%	0.4%	0.2%
EUR	GfK German Consumer Climate (Aug)	10.0	9.9	10.1
GBP	GDP (QoQ) (Q2)	0.6%	0.4%	0.4%
GBP	GDP (YoY) (Q2)	2.2%	2.0%	2.0%
USD	Core Durable Goods Orders (MoM) (Jun)	-0.5%	0.3%	-0.3%
USD	Durable Goods Orders (MoM) (Jun)	-4.0%	-1.1%	-2.3%
USD	Pending Home Sales (MoM) (Jun)	0.2%	1.4%	-3.7%
USD	Crude Oil Inventories		-2.257M	-2.342M
USD	Cushing Crude Oil Inventories			0.189M
USD	FOMC Statement
USD	Fed Interest Rate Decision		0.50%	0.50%

Upcoming Economic Events that you should be monitoring:

Thursday, July 28, 2016

Cur.	Event	Actual	Forecast	Previous
GBP	Nationwide HPI (MoM) (Jul)		-0.2%	0.2%
GBP	Nationwide HPI (YoY) (Jul)		4.5%	5.1%
EUR	German Unemployment Change (Jul)		-3K	-6K
EUR	German Unemployment Rate (Jul)		6.1%	6.1%
EUR	German CPI (MoM) (Jul)		0.2%	0.1%
USD	Goods Trade Balance (Jun)		-61.10B	-60.59B
USD	Initial Jobless Claims		260K	253K

Government Bond Auctions

Date/Time Country Type

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction

About the Author

James Hyerczykauthor

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.