Analysis and Recommendations: The USD/CAD eased by a few pips after hitting a 2015 high against the strong US dollar. The pair is trading at 1.3185 and
The USD/CAD eased by a few pips after hitting a 2015 high against the strong US dollar. The pair is trading at 1.3185 and could easily move above 1.32 today. Oil continues it bearish trend while gold remains in its recent down trend weighing heavily on the Canadian dollar. Following news that the Canadian economy unexpectedly contracted, there has been renewed speculation that the central bank will likely have to cut interest rates again. At the same time, the Federal Reserve has confirmed its intention to raise rates later this year, provided the labor market shows “some” more improvement.
The fact that the two central banks are moving in opposite directions is a weight on the Canadian dollar.
However, the capital flows into and out of Canada swamp the value of oil exports, which are also offset by the fact that provinces in the east import oil. In fact, the traditional pattern has been for the eastern provinces to import more expensive Brent oil, while a few western provinces export cheaper oil to the US. In 2014, Canada’s exported about $105 bln of energy products and imported about $46 bln of energy products. Let’s not forget that Canada is an important exception to the US ban on oil exports.
The importance of oil for the Canadian dollar is not just about the value of its single largest export but it is more general proxy in the current environment for the overall Canadian economy, which had become highly leveraged to oil prices.
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 |
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CNY |
Caixin Services PMI (Jul) |
53.8 |
52.2 |
51.8 |
|
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RUB |
Markit Services PMI (Jul) |
51.6 |
49.2 |
49.5 |
|
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CHF |
CPI (MoM) (Jul) |
-0.6% |
-0.4% |
0.1% |
|
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EUR |
Spanish Services PMI (Jul) |
59.7 |
55.5 |
56.1 |
|
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EUR |
German Services PMI (Jul) |
53.8 |
53.7 |
53.7 |
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EUR |
Markit Composite PMI (Jul) |
53.9 |
53.7 |
53.7 |
|
|||
EUR |
Services PMI (Jul) |
54.0 |
53.8 |
53.8 |
|
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GBP |
Services PMI (Jul) |
57.4 |
58.0 |
58.5 |
|
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EUR |
Retail Sales (MoM) (Jun) |
-0.6% |
-0.3% |
0.1% |
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Upcoming Economic Events that you should be monitoring:
Thursday, August 6, 2015
Cur. |
Event |
Actual |
Forecast |
Previous |
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AUD |
Employment Change (Jul) |
|
15.0K |
7.3K |
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GBP |
Manufacturing Production (Jun) |
|
0.2% |
-0.6% |
|
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GBP |
BoE Inflation Report |
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|
|
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GBP |
Interest Rate Decision (Aug) |
|
0.50% |
0.50% |
|
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GBP |
BoE MPC Meeting Minutes |
|
|
|
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GBP |
BoE Gov Carney Speaks |
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Government Bond Auctions
Date Time Country
Aug 06 10:30 Spain Auctions Bonos
Aug 06 11:10 France Auctions OATs
Aug 10 17:30 Italy Announces details of BTP/CCTeu on 13 Aug
Aug 11 11:30 UK Auctions 0.125% 2058 I/L Gilt
Aug 12 11:30 Germany Eur 4bn Aug 2025 Bund
Aug 13 11:10 Italy Auctions BTPs/CCTeus