USD/CAD Fundamental Analysis – August 14, 2015 – Forecast

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Published: Aug 13, 2015, 12:20 UTC

Analysis and Recommendations: The USD/CAD added 32 points as markets corrected from Tuesday and Wednesday’s panic caused by a change in the Chinese

USD/CAD Fundamental Analysis – August 14, 2015 – Forecast

Analysis and Recommendations:

The USD/CAD added 32 points as markets corrected from Tuesday and Wednesday’s panic caused by a change in the Chinese currency policy. Market reaction was close to a riot as traders feared the worse but China seemed to have everything well in hand. Gold gave back some of its gains and oil remains near its recent bottoms, as the Loonie begins to weaken and the US dollar returns to normal. The pair is currently at 1.3010. The dollar tumbled against the euro and the yen on Wednesday as the picture for U.S. interest rates muddied for more investors after China’s currency plunged for a second day.

Investors are starting to push back their expectations for the Federal Reserve to raise borrowing costs in September as the sinking yuan has increased concerns about Chinese growth and global inflation expectations.

The dollar shed 1.1% against the common currency in late-afternoon trade, as one euro bought $1.1163, on pace for its highest close in a month.

The dollar continued to see volatile trading as investors grappled with the fallout of the People’s Bank of China’s move on Tuesday to devaluate the yuan by 1.9%. One day after strengthening against most developed-market currencies, the dollar weakened as a larger number of investors pulled back from bets that the dollar would rise on the back of a stronger U.S. economy and the prospects of an interest-rate increase in 2015.

In addition, U.S. inflation expectations, a key metric for the Fed, continue to decline under the prospects of a stronger dollar, said Shahab Jillions, currency research analyst at Credit Suisse.

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.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
NZD	Business NZ PMI (Jul)	53.5		55.2
GBP	RICS House Price Balance (Jul)	44%	42%	40%
AUD	RBA Assist Gov Kent Speaks
EUR	German CPI (MoM) (Jul)	0.2%	0.2%	0.2%
EUR	Spanish CPI (YoY) (Jul)	0.1%	0.1%	0.1%
EUR	Spanish HICP (YoY) (Jul)	0.0%	-0.1%	-0.1%
CHF	PPI (MoM) (Jul)	-0.3%	-0.2%	-0.1%
EUR	Account of Monetary Policy Meeting

Upcoming Economic Events that you should be monitoring:

Friday, August 14, 2015

Cur.	Event	Actual	Forecast	Previous
NZD	Core Retail Sales (QoQ)		0.7%	2.9%
EUR	German GDP (QoQ) (Q2)		0.5%	0.3%
EUR	Core CPI (YoY) (Jul)		1.0%	1.0%
EUR	CPI (MoM) (Jul)		-0.6%	0.0%
EUR	GDP (QoQ) (Q2)		0.4%	0.4%
USD	PPI (MoM) (Jul)		0.1%	0.4%
CAD	Manufacturing Sales (MoM) (Jun)		2.1%	0.1%
USD	Industrial Production (MoM) (Jul)		0.3%	0.3%
USD	Michigan Consumer Sentiment (Aug)		93.5	93.1