USD/CAD Fundamental Analysis – November 6, 2015 – Forecast

Analysis and Recommendations:

The USD/CAD is up 15 points at 1.3165 supported by the strong dollar. Gold and oil prices are steady in today’s session so the Loonie has had no support. Just as in the U.S., the big question on everyone’s mind is of course the issue of interest rate hikes.

Interest rate differentials will work against the Canadian dollar, if and when the U.S. Federal Reserve decides to raise rates, perhaps as early as the first quarter of 2016. This is due to the fact that the Fed is inching closer to raising interest rates while the Bank of Canada is not expected to revisit interest rates in the near term.

This policy choice is largely the result of low energy prices, particularly crude oil, for which there is no expected price rally until the end of 2016 at the earliest. But there is also the notable problem of stagnating domestic economic growth, with the Canadian gross domestic product exerting continued negative pressure on the Canadian dollar. But these forecasts might still be too optimistic, because if current trends continue, it is not altogether inconceivable that the Canadian dollar will absolutely plummet down to half the greenback’s value.

What the Bank of Canada is betting on are strengthened exports, which will be contrastingly given a boost by the crash in the Canadian dollar’s value. Therein lies the double-edged sword in currency fluctuations: if the value of your own currency rises, it will make foreign imports more expensive because you’re being the same amount with less money. On the flip side, your own exports to other countries are cheaper for foreigners to purchase, and this should boost your exports in theory.

The Bank of Canada is endeavoring to restructure the Canadian economy from depending on domestic-driven growth drivers to one in which international trade and investment take the driver’s seat.

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:

 

Upcoming Economic Events that you should be monitoring:

Friday, November 6, 2015

Government Bond Auctions

Date Time Country

Nov 05 09:30 Spain Auctions Bonos

Nov 05 09:50 France Auctions OATs

Nov 05 10:03 Sweden Holds I/L bond auction

Nov 09 12:00 Norway Details bond auction on 11 Nov

Nov 09 15:30 Italy Announces details of BTPs/CCTeu on 12 Nov

Nov 09 N/A US Holds 3-year note auction

Nov 10 10:30 UK 0.125% 2058 I/L Gilt auction

Nov 10 N/A Holland Eur 2.0-3.0bn 0% Apr 2018 DSL

Nov 10 N/A US Holds 10-year note auction

Nov 11 10:03 Sweden Holds bond auction

Nov 11 11:15 Norway Holds bond auction

Nov 11 10:30 Germany Eur 3bn 0.25% Oct 2020 Bobl

Nov 12 10:10 Italy Auctions BTPs/CCTeus

Nov 12 10:30 UK 4.25% 2039 Gilt auction

Nov 12 N/A US Holds 30-year bond auction