USD/CAD Fundamental Analysis – August 25, 2015 –Forecast

Analysis and Recommendations:

The USD/CAD soared 62 points to 1.3250 as commodity currencies were dumped all day. Oil prices fell to their lowest level in year at 38.83 down $1.63 today. Even the decline in the US dollar was not able to support the Loonie. Sirens rang across world markets on Monday as a near 9 percent dive in China shares and a sharp drop in the dollar and major commodities panicked investors.

European stocks were more than 5 percent in the red and Wall Street was braced for similar losses after Asian shares slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand.

Oil plunged another 4 percent, while safe-haven government U.S. [.T] an German bonds and the yen and the euro rallied as widespread fears of a China-led global economic slowdown and currency war kicked in. “It is a China driven macro panic,” said chief investment officer at ABN. “Volatility will persist until we see better data there or strong policy action through forceful monetary easing.”

Many traders had hoped that such support measures, which could include an interest rate cut, would have come from Beijing over the weekend after its main stocks markets slumped 11 percent last week.

The Canadian dollar’s rout is probably near an end, a Reuters poll of foreign exchange strategists showed, but with energy prices falling and the economy likely in recession, the path of least resistance is down.

Canada’s commodity-driven currency has lost nearly 14 per cent against the greenback since the start of 2015 as its economy shrank in the first three months of the year, and quite possibly in the April-June as well.

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.

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Tuesday, August 25, 2015