USD/CAD Fundamental Forecast – May 27, 2016

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Published: May 26, 2016, 10:37 UTC

The USD/CAD dipped 37 points to 1.2983 as the greenback gave up some of yesterday’s gains. The CAD was supported by Bank of Canada decision to hold rates.

USD/CAD Fundamental Forecast – May 27, 2016

The USD/CAD dipped 37 points to 1.2983 as the greenback gave up some of yesterday’s gains. The CAD was supported by Bank of Canada decision to hold rates. In North America today the calendar is light with only Durable Goods and Pending Homes on the calendar, so trading will likely be driven by risk flows from both equity and credit markets, but given the generally quiet state of affairs, the majors should remain tightly range bound for the rest of the day.

Comments from Governor Jerome Powell mirroring the recent hawkish pivot in Fed rhetoric would probably encourage this dynamic, particularly considering that members of the Governing Board have tended to be more dovish than regional branch presidents. The greenback is likely to stage a broad-based advance in this scenario.

The BoC as expected did not change its benchmark interest rate from 0.50 percent. Also anticipated was the addition of comments around the not fully quantified Alberta wild fires impact on the economy. The central bank was optimistic in saying the economy would bounce back in the third quarter of the year, with the first one coming in line with previous forecasts. The second quarter is being forecasted as a contraction as the economy remains too dependent on natural resources.

The statement from the BoC makes it clear that a change in monetary policy is not forthcoming this year. At least until things change dramatically from the central bank’s forecast with both a journey into negative rates and a rate hike on the table depending on the performance of the Canadian economy.

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.

Upcoming Economic Events that you should be monitoring:

Friday, May 27, 2016

Cur.	Event	Actual	Forecast	Previous
AUD	RBA Assist Gov Debelle Speaks
JPY	National Core CPI (YoY) (Apr)		-0.4%	-0.3%
JPY	Tokyo Core CPI (YoY) (May)		-0.4%	-0.3%
USD	GDP (QoQ) (Q1)		0.9%	0.5%
USD	GDP Price Index (QoQ) (Q1)		0.7%	0.7%
USD	Michigan Consumer Expectations		86.6	87.5
USD	Michigan Consumer Sentiment (May)		95.4	95.8
USD	Fed Chair Yellen Speaks
USD	Baker Hughes U.S. Rig Count			318