USD/CAD Weekly Fundamental Analysis October 22-26, 2012 Forecast

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USD/CAD Weekly Fundamental Analysis October 22-26, 2012 Forecast

USD/CAD Weekly Fundamental Analysis October 22-26, 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 ended Friday at 0.9936 while it traded at 0.9806 on the previous Monday’s open. The USD soared after a week of positive eco data changed the view of the traders reducing the likelihood of additional stimulus this week at the FOMC meeting. There are positive signs that the US recovery is back on track.

Date

Last

Open

High

Low

Change %

Oct 19, 2012

0.9936

0.9849

0.9940

0.9846

0.89%

Oct 18, 2012

0.9848

0.9784

0.9860

0.9764

0.65%

Oct 17, 2012

0.9784

0.9859

0.9872

0.9773

-0.76%

Oct 16, 2012

0.9859

0.9811

0.9878

0.9803

0.49%

Oct 15, 2012

0.9811

0.9806

0.9818

0.9770

0.05%

Across the border things are not as sure. Retail sales for August will be released on October 23 and analysts  anticipates a decent 0.4% month-on-month print on the strength of an increase in gasoline prices, which averaged C$1.2725 at the pump in August vs. C$1.2240 in July. We also think that car sales were higher, up 3% after seasonal adjustment, although new vehicle sales only make up a component of sales at new vehicle dealers (services are a major part as well). The wild-card is that we saw stronger sales at large retailers than is typical during August, which often though not always correlates well with broader retail sales. In short, all signs are pointing to a solid retail sales number. 

The Bank of Canada will make a rate announcement on the 23rd and issue its MPR the next day.

After speeches this week by the Governor of the BoC it is unlikely that markets will see any play from the central bank.

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 October 15-19, 2012 actual v. forecast

Date

Currency

Event

Actual

Forecast

Previous

Oct. 15

GBP

Rightmove House Price Index (MoM) 

3.5%

 

-0.6%

 

CHF

PPI (MoM) 

0.3%

0.2%

0.5%

 

USD

Core Retail Sales (MoM) 

1.1%

0.6%

1.0%

 

USD

Retail Sales (MoM) 

1.1%

0.8%

1.2%

 

USD

NY Empire State Manufacturing Index 

-6.2

-4.5

-10.4

Oct. 16

GBP

Core CPI (YoY) 

2.1%

2.1%

2.1%

 

GBP

CPI (YoY) 

2.2%

2.2%

2.5%

 

GBP

PPI Input (MoM) 

-0.2%

-0.1%

1.9%

 

GBP

CPI (MoM) 

0.4%

0.4%

0.5%

 

GBP

PPI Input (YoY) 

-1.2%

-0.8%

1.1%

 

EUR

CPI (YoY) 

2.6%

2.7%

2.7%

 

EUR

German ZEW Economic Sentiment 

-11.5

-15.0

-18.2

 

EUR

ZEW Economic Sentiment 

-1.4

-1.1

-3.8

 

EUR

Core CPI (YoY) 

1.5%

1.6%

1.5%

 

USD

Core CPI (MoM) 

0.1%

0.2%

0.1%

 

USD

CPI (MoM) 

0.6%

0.5%

0.6%

 

USD

CPI (YoY) 

2.0%

1.9%

1.7%

 

USD

Core CPI (YoY) 

2.0%

2.0%

1.9%

 

USD

TIC Net Long-Term Transactions 

90.0B

45.3B

67.2B

 

USD

Industrial Production (MoM) 

0.4%

0.2%

-1.4%

Oct. 17

GBP

Average Earnings Index +Bonus 

1.7%

1.6%

1.6%

 

GBP

Claimant Count Change 

-4.0K

-1.0K

-14.2K

 

USD

Building Permits 

0.894M

0.810M

0.801M

 

USD

Housing Starts 

0.872M

0.770M

0.758M

 Oct. 18

GBP

Retail Sales (MoM) 

0.6%

0.4%

-0.1%

 

GBP

Retail Sales (YoY) 

2.5%

2.1%

2.5%

 

EUR

Spanish 10-Year Obligation Auction 

5.458%

 

5.666%

 

USD

Initial Jobless Claims 

388K

365K

342K

 

USD

Continuing Jobless Claims 

3252K

3275K

3281K

 

USD

Philadelphia Fed Manufacturing Index 

5.7

1.0

-1.9

Oct. 19 

USD

Existing Home Sales 

4.75M

4.75M

4.83M

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. 23

13:30

CAD

Core Retail Sales (MoM) 

 

0.4% 

 

13:30

CAD

Retail Sales (MoM) 

 

0.7% 

 

14:00

CAD

Interest Rate Decision 

1.00%

1.00%

Oct. 24

15:00

USD

New Home Sales

385K

373K

Government Bond Auction

Date Time Country 

Oct 22 09:10 Norway 

Oct 23 08:30 Spain 

Oct 23 14:30 UK 

Oct 23 17:00 US 

Oct 24 09:10 Sweden 

Oct 24 09:30 Germany 

Oct 24 14:30 Sweden 

Oct 24 15:30 Italy  

Oct 24 16:30 US 

Oct 25 00:30 Japan 

Oct 25 09:10 Sweden 

Oct 25 15:30 Italy  

Oct 25 17:00 US 

Oct 26 09:10 Italy

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About: FX Empire Analyst - Barry Norman

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