USD/CAD Weekly Fundamental Analysis October 1-5, 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 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.

Date

Last

Open

High

Low

Change %

Sep 28, 2012

0.9836

0.9809

0.9852

0.9782

0.28%

Sep 27, 2012

0.9809

0.9844

0.9854

0.9792

-0.36%

Sep 26, 2012

0.9844

0.9810

0.9860

0.9800

0.35%

Sep 25, 2012

0.9810

0.9783

0.9815

0.9757

0.28%

Sep 24, 2012

0.9783

0.9778

0.9818

0.9776

0.05%

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

Date

Currency

Event

Actual

Forecast

Previous

Sep. 25 

CAD

Core Retail Sales (MoM) 

0.4%

0.3%

-0.4%

 

CAD

Retail Sales (MoM) 

0.7%

0.3%

-0.3%

 

USD

CB Consumer Confidence 

70.3

63.0

61.3

 Sep. 26

USD

New Home Sales 

373K

380K

374K

Sep. 27 

USD

Core Durable Goods Orders (MoM) 

-1.6%

0.3%

-1.3%

 

USD

Durable Goods Orders (MoM) 

-13.2%

-5.0%

3.3%

 

USD

Initial Jobless Claims 

359K

378K

385K

 

USD

GDP (QoQ) 

1.3%

1.7%

1.7%

 

USD

Continuing Jobless Claims 

3271K

3285K

3275K

 

USD

Pending Home Sales (MoM) 

-2.6%

-0.7%

2.6%

 Sep. 28

USD

Core PCE Price Index (MoM) 

0.1%

0.1%

0.1%

 

CAD

GDP (MoM) 

0.2%

0.2%

0.1%

 

USD

Personal Spending (MoM) 

0.5%

0.5%

0.4%

 

USD

Chicago PMI 

49.7

53.0

53.0

 

USD

Michigan Consumer Sentiment 

78.3

79.0

79.2

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.

Date

Time

Currency

Event

Forecast

Previous

 Oct. 01

15:00

USD

ISM Manufacturing Index 

49.8 

49.6 

Oct. 04

15:00

CAD

Ivey PMI 

 

62.5 

Oct. 05 

13:30

CAD

Building Permits (MoM) 

 

-2.3% 

 

13:30

CAD

Employment Change 

 

34.3K 

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 

 

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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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