USD/CAD Fundamental Forecast – May 9, 2016

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Published: May 6, 2016, 12:00 UTC

The USD/CAD added 23 points as the Loonie weakened ahead of Canadian jobs data and lackluster economic events as well as declining oil prices. The pair is

The USD/CAD added 23 points as the Loonie weakened ahead of Canadian jobs data and lackluster economic events as well as declining oil prices. The pair is trading at 1.2877. We may have passed “a point of peak optimism” on the Canadian economy, senior foreign-exchange strategist Mazen Issa wrote, after the release Wednesday of trade data for March in which America’s neighbor to the north recorded its biggest monthly deficit on record. Exports tanked, with acute weakness in shipments to the U.S. Canada’s trade surplus with its largest trading partner shrank to levels not seen since before the North American Free Trade Agreement was signed.

“We are reluctant to infer too much from the monthly swings of a highly volatile data set, but today’s international trade report from Canada provides a very strong reminder that investors should remain cautious toward the CAD’s underlying macro backdrop,” Issa wrote in a note to clients.

The Canadian dollar’s wild rally since mid-February hasn’t been wholly a function of rising oil prices.

he wildfire in Fort McMurray, Alberta continues to rage on. Losses from the ongoing disaster are calculated at $1 billion. The price of oil rose as it is estimated 500,000 barrels are offline as the fire hit the crude producing province. The price of crude has kept the CAD in current levels as the USD rally has slowed down awaiting the U.S. nonfarm payrolls (NFP) report.

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