USD/CAD Fundamental Analysis Jan. 26, 2012, Forecast

Economic Events: (GMT)

13:30     USD     Core Durable Goods Orders (MoM)     0.9%     0.3%

13:30     USD     Durable Goods Orders (MoM)     2.0%     3.7%

Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

 13:30    USD     Initial Jobless Claims     370K     352K

 13:30    USD     ontinuing Jobless Claims     3432K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

15:00     USD     New Home Sales     320K     315K

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Analysis and Recommendations:

The USD/CAD is currently trading 1.0055 falling from the high of 1.0148.

The greenback maintained its strength during morning trading and held on through mid day waiting for the FOMC statements.

While the euro also stayed close to the 1.30 level even though investors were worried and all the news from Brussels and Greece were negative.

The Fed Interest Committee promised to hold low interest rates through 2014, with this said the dollar began to drop around the world. Within minutes the USD was down and gold skyrocketed up over 35.00 breaking the 1700.00 level.

Thus pushing the Canadian dollar up against the USD. This weakness will continue through out the day, the markets and investors are reactionary.

Any word or statements from the EU will throw the markets into high gear.

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