USD/CAD Weekly Fundamental Analysis July 30 – Aug 3, 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 is trading at 1.0031, with little in the way of supportive data out of Canada this week and the CAD some dependent on the sinking US economy, that there seems to be no good side for the Looney at the moment. Oil prices are steady but well off their highs of just a month ago.

Date

Last

Open

High

Low

Change %

Jul 27, 2012

1.0031

1.0101

1.0106

1.0031

-0.69%

Jul 26, 2012

1.0101

1.0159

1.0167

1.0063

-0.57%

Jul 25, 2012

1.0159

1.0227

1.0232

1.0139

-0.66%

Jul 24, 2012

1.0227

1.0182

1.0227

1.0158

0.44%

Jul 23, 2012

1.0182

1.0144

1.0204

1.0142

0.38%

Canadian markets face two main risks next week but will spend most of the time following the global market tone as set by bigger developments abroad.  Monthly GDP for May will be released on Tuesday. 

The Canadian economy is nonetheless tracking disappointingly soft growth over 2012H1 at what we figure is a 1.9% annualized pace in each of Q1 and Q2.  The second main risk next week is that we transition toward another active week for earnings releases.  A total of 135 companies release earnings on Monday Lastly, Canada auctions 10s on Wednesday just before the FOMC decision that could make investors uncertain of the bond market after-math.

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.

Major Economic Events for the week of July 23-27 actual v. forecast for the Canadian & US Dollar

Date

Currency

Event 

Actual

Forecast

Previous

Jul 24

CAD

Core Retail Sales m/m

0.5%

0.1%

-0.4%

 

CAD

Retail Sales m/m

0.3%

0.4%

-0.6%

 

USD

Flash Manufacturing PMI

51.8

52.1

52.5

Jul 25

USD

New Home Sales

350K

372K

382K

 

USD

Crude Oil Inventories

2.7M

-0.1M

-0.8M

Jul 26

USD

Core Durable Goods Orders m/m

-1.1%

0.1%

0.8%

 

USD

Unemployment Claims

353K

381K

388K

 

USD

Pending Home Sales m/m

-1.4%

0.6%

5.4%

Jul 27

USD

Advance GDP q/q

1.5%

1.5%

1.9%

 

USD

Revised UoM Consumer Sentiment

72.3

72.0

72.0

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 Canadian Markets.

Date

Time

Currency

 Event

Previous

Jul 31

12:30

CAD

GDP m/m

0.3%

 

12:30

CAD

RMPI m/m

-1.0%

 

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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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