USD/CAD Fundamental Analysis December 20, 2012, Forecast

Analysis and Recommendations:

The USD/CAD followed all the commodity currencies where the USD was stronger. The AUD, NZD and the CAD all dropped against the dollar today. The USD/CAD is trading at 0.9874. The Canadian dollar was weaker against its U.S. counterpart, trending with other commodity currencies, as many investors looked to book profits ahead of the holidays following a recent rally to two-month highs. Canada’s dollar ran counter to world shares, which hit 17-month highs, and the surging euro. Investor hopes grew for a year-end budget deal in the United States and for further monetary stimulus from the Bank of Japan.

There are three key reasons that the CAD is weak: 1) hedging against a negative outcome of the fiscal cliff negotiations; 2) the widening Brent – Western Canada Select oil spread; and 3) general underperformance by the commodity currencies. With regards to the first, investors appear to have a preference to hedge the fiscal cliff risk through short CAD positions. Most investors appear to have positioned for a market positive conclusion to the fiscal cliff discussions.

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 December 19, 2012 actual v. forecast

 

Upcoming Economic Events that affect the CAD and USD

Government Bond Auction

Date Time Country 

Dec 20 10:30 UK 

Dec 20 16:30 Italy  

Dec 20 18:00 US 

Dec 21 16:30 Italy