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USD/CAD Weekly Fundamental Analysis – February 15-19, 2016 -Forecast

By:
Barry Norman

Weekly Analysis and Recommendation: The USD/CAD ended a busy week at 1.3847 after gold soared and oil reversed significant losses on Friday. The CAD

USD/CAD Weekly Fundamental Analysis – February 15-19, 2016 -Forecast

usdcad weekly bns
Weekly Analysis and Recommendation:

The USD/CAD ended a busy week at 1.3847 after gold soared and oil reversed significant losses on Friday. The CAD strengthened as the US dollar tumbled.  The Canadian Dollar continues to claw back some of the 23% drop since the May 2015 low against the US Dollar. Much of the rise of the CAD, and subsequent fall on USD/CAD had to do with persistent weakness in the US Dollar that was seen this week. Now, attention will turn to two key fundamental releases next week in Canada along with a look at Oil to see if it can continue to build on Friday’s rally of ~12%.

Looking beyond this week’s economic print of New Housing Price Index, which decreased from 0.2% in November to 0.1% in December, traders will look to see if Friday’s CPI and Retail Sales can build on recent prints. CPI is expected to build on December’s print of 1.6% up to 1.7%. While such a print would keep inflation below the Bank of Canada’s 2% inflation target, it would still likely be the envy of many central bankers whose own inflation readings are near zero.

Retail Sales do not look to have such a stable reading as economists polled expect a drop to -0.7%, down from 1.7% last month.

The US Dollar tumbled for the second straight week against the Japanese Yen and other major counterparts in a volatile week for global markets. Yet upbeat economic data suggests that the move has been overdone, and it seems fairly clear that broader market turmoil remains the biggest driver of currency moves. A US market holiday on Monday makes continued near-term volatility less likely, but the true fireworks will likely come on Sunday night when Chinese traders return from Lunar New Year holidays.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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Major Economic Events for the week:

Cur. Event Actual Forecast Previous  
Monday, February 15, 2016
      United States – Presidents’ Day
      Canada – Family Day
    CNY Trade Balance (Jan)   58.85B 60.09B  
Tuesday, February 16, 2016
    GBP CPI (YoY) (Jan)   0.3% 0.2%  
    EUR German ZEW Economic   3.2 10.2  
Wednesday, February 17, 2016
    GBP Average Earnings Index   1.9% 2.0%  
    GBP Claimant Count Change (Jan)   -3.0K -4.3K  
    USD Building Permits (Jan)   1.200M 1.204M  
    USD PPI (MoM) (Jan)   -0.2% -0.2%  
Thursday, February 18, 2016
    AUD Employment Change (Jan)   15.0K -1.0K  
    CNY CPI (YoY) (Jan)   1.9% 1.6%  
    USD Philadelphia Fed   -2.8 -3.5  
    USD Crude Oil Inventories     -0.754M  
Friday, February 19, 2016
    GBP Retail Sales (MoM) (Jan)   0.8% -1.0%  
    USD Core CPI (MoM) (Jan)   0.2% 0.1%  
    CAD Core CPI (MoM) (Jan)   0.2% -0.4%  
    CAD Core Retail Sales (MoM) (Dec)   -0.5% 1.1%

Upcoming Government Bond Auctions

Date Time Country 

Feb 15 13:00 Norway Details of bond auction on Feb 17

Feb 17 11:03 Sweden Holds bond auction

Feb 17 11:05 Norway Holds bond auction

Feb 17 11:30 Germany Euro 5bn 0.5% Feb 2026 Bund

Feb 17 11:30 UK New Jul 2026 Gilt auction

Feb 18 10:30 Spain Holds bond auction

Feb 18 11:50 France Holds bond auction

Feb 18 17:20 Sweden Details of I/L auction on Feb 25

Feb 19 11:10 Italy Details of BTP€i/Zero-coupon auction

 

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