USD/CAD Fundamental Analysis April 18, 2014 Forecast

Analysis and Recommendations:

The USD/CAD is flat ahead of Canadian and US data due later today. The CAD is trading at 1.1012 against a weaker US dollar. The CAD reacted to lack of action yesterday by the Bank of Canada and today will look at inflation numbers while the US will see weekly unemployment claims. The Bank of Canada maintained its benchmark interest rate of 1.00% yesterday but the ‘Loonie’ was undermined by comments from Governor Stephen Poloz, which left the door open to further rate cuts in the future. Poloz said that any decision on the direction of monetary policy would be influenced by future economic developments. His refusal to rule out additional rate cuts helped drive the Canadian Dollar down.

Canadian exports aren’t getting the expected lift from a recent weakening of the Canadian dollar, confounding the Canadian central bank’s hopes for a recovery driven by exports and business investment.

Part of the reason is that before its decline in recent months, the Canadian dollar had been strong for several years, making Canadian goods less competitive in global markets. But the bigger problem, according to some economists, is that Canadian labor costs are much higher than in the U.S. and Mexico, so it is harder for Canadian goods to compete globally.

Bank of Canada Gov. Stephen Poloz said Wednesday that Canada’s growth is expected to strengthen as the U.S. economic recovery gains traction, but “this view hinges critically on the projected upturn in exports and investment.” He said the lower Canadian dollar “should provide additional support” for Canadian exports, some three-quarters of which go to the U.S.

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 up to the data analysis and information in our weekly reports.

Economic Data April 17, 2014 actual v. forecast

 

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Government Bond Auction

Date Time Country 

Apr 22 08:00 Holland

Apr 22 08:30 Spain

Apr 22 10:00 Belgium

Apr 22 14:30 UK

Apr 22 15:30 Italy

Apr 22 17:00 US

Apr 23 09:03 Sweden

Apr 23 15:30 Italy

Apr 23 17:00 US

Apr 24 08:30 Spain