USD/CAD Fundamental Analysis – December 28, 2015 – Forecast

Analysis and Recommendations:

The USD/CAD added 8 points as traders’ square positions ahead of the holiday. The pair is trading at 1.3856 after some better than expected Canadian data released late on Wednesday. The Canadian monthly GDP was flat month-on-month in October, below expectations, following a decline of 0.5% m-o-m in September as services are stagnating, while the goods sector continues to contract.

Moreover, these number suggests that growth in Q4 is likely to be close to 0% and could even be negative. This is well below the BoC’s forecast of 1.5% in the October MPR. While we believe that the forthcoming fiscal stimulus reduces the need for further monetary policy stimulus, the weakness in the Canadian data increases the probability that the BoC will need to cut rates next year.

Much of the market is bullish about the U.S. dollar in the next year but the currency may well surprise on the downside, according to an analyst. Oil prices, on the other hand, may bounce back as the current slump is largely due to the ongoing El Nino weather phenomenon that is causing a milder than usual winter. The overnight rise of oil prices is helping to support the Canadian dollar into the holidays.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, December 28, 2015

Government Bond Auctions

Date Time Country

Dec 28 19:00 US Holds 2-year auction

Dec 29 11:10 Italy Auctions CTZ

Dec 29 n/a UK Announces details of Gilt auction on Jan 05 & 07

Dec 29 19:00 US Holds 5-year note auction

Dec 30 11:10 Italy Auctions BTPs/CCTeus

Dec 30 19:00 US Holds 7-year note auction