USD/CAD Weekly Fundamental Analysis August 27-31, 2012 Forecast

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Introduction: The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds to economic reports within Canada. It has little action against foreign currencies except during major moves or crisis.

The USD/CAD is the single biggest beneficiary of rising oil prices. Canada which is already the biggest exporter of oil to the US will experience a boost to its economy when oil price continue to increase. Therefore, if oil rises the Canadian dollar is likely to follow. Over the past years, the correlation between the Canadian dollar and oil prices has been approximately 81%. 

Weekly Analysis and Recommendation:

The USD/CAD closed the week at 0.9922 as parity continues to draw near. As Canada keeps surprising markets with negative eco data, the Looney continues to decline. Wholesale Sales were down and retail sales tumbled in Canada. While US numbers were much better. The dollar fell against most of its trading partners with the possibility of stimulus from the Feds. The Loonie was so weak it was not able to capitalize on these moves.

Date

Last

Open

High

Low

Change %

Aug 24, 2012

0.9922

0.9940

0.9947

0.9905

-0.18%

Aug 23, 2012

0.9940

0.9906

0.9949

0.9886

0.33%

Aug 22, 2012

0.9907

0.9898

0.9947

0.9898

0.09%

Aug 21, 2012

0.9898

0.9888

0.9900

0.9843

0.10%

Aug 20, 2012

0.9888

0.9887

0.9902

0.9876

0.02%

How has Canada weathered the global slump of mid-2012? GDP for Q2 will be released on August 31 along with the monthly GDP data for June. Scotia is expecting a flat 0% m/m GDP outcome which would translate into a 1.4% q/q GDP print after accounting for fairly weak growth during April and May. It may come as a surprise, but even muted 1.4% GDP growth would put Canadian GDP on the high end of the range of global developed countries during Q2, better than major European economies but slightly below the U.S.). That’s not to say that the economy is firing on all cylinders.

FxEmpire provides in-depth analysis for each currency and commodity 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.

Major Economic Events for the week of August 20-24, 2012 actual v. forecast for the Canadian & US Dollar

Date

Currency

Event

Actual

Forecast

Previous

Aug. 21

CAD

Wholesale Sales (MoM) 

-0.1%

0.4%

0.9%

Aug. 22

CAD

Core Retail Sales (MoM) 

-0.4%

0.3%

0.4%

 

CAD

Retail Sales (MoM) 

-0.4%

0.1%

0.2%

 

USD

Existing Home Sales 

4.47M

4.52M

4.37M

Aug. 23

USD

Initial Jobless Claims 

372K

365K

368K

 

USD

Continuing Jobless Claims 

3317K

3300K

3313K

 

USD

New Home Sales 

372K

365K

359K

Aug. 24

USD

Core Durable Goods Orders (MoM) 

-0.4

0.5%

-1.4%

 

USD

Durable Goods Orders (MoM) 

4.2

2.4%

1.3%

Historical:

Highest: 1.0842 CAD on Nov 01, 2009.

Average: 1.0147 CAD over this period.

Lowest: 0.9407  CAD on Jan 26, 2011. 

 

Economic Highlights of the coming week that affect the American and Canadian Markets.

Date

Time

Currency

Event

Previous

Aug. 28 

15:00

USD

CB Consumer Conf 

65.9 

Aug. 30 

13:30

CAD

Current Account 

-10.3B 

Aug. 31

13:30

CAD

GDP (MoM) 

0.1% 

Government Bond Auctions

Date  Time  Country 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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