USD/CAD Weekly Fundamental Analysis October 1-5, 2012 Forecast

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 0.9836 on a last minutes surge of the USD. Canada’s dollar gained the most in two years against its U.S. peer this quarter after stimulus measures by governments worldwide fueled the advance of stocks and oil, spurring investor demand for higher-yielding assets.

The Canadian currency also advanced this month as the Federal Reserve announced a plan for open-ended debt buying to spur economic growth, which may debase the U.S. currency. Canadian government bonds dropped in the quarter as European Central Bank President Mario Draghi unveiled an unlimited debt- buying program, sapping demand for haven assets. Canadian employment growth is forecast to slow in September, according to a Bloomberg survey before the report next week.

The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, rose 3.4 percent in the quarter to 98.37 cents per U.S. dollar, the biggest gain since the quarter ended March 2010. It fell 1.8 percent in the previous quarter. Canada’s dollar added 0.3 percent this month and declined 0.7 percent on the week. One Canadian dollar buys $1.0166.

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 September 24-28, 2012 actual v. forecast for the Canadian & US Dollar

Historical: From 2010 to present

Highest: 1.0853 CAD on May 25, 2010.

Average: 1.0090 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.

Government Bond Auction

Date Time Country 

Oct 01 10:00 Norway 

Oct 02 09:15 Austria 

Oct 02 09:30 Belgium 

Oct 02 09:30 UK 

Oct 02 14:30 UK 

Oct 03 09:10 Sweden 

Oct 03 10:00 Norway 

Oct 04 08:30 Spain 

Oct 04 08:50 France 

Oct 04 15:00 US 

Oct 05 15:30 Italy