USD/CAD Fundamental Analysis October 17, 2013 Forecast

Analysis and Recommendations:

The USD/CAD eased by 9 points as the dollar tumbled after lawmakers were unable to reach a deal late yesterday and returned to negotiations early this morning but no deal has come forward as of yet with time running out. The government will default at midnight tomorrow night and any deal has to be approved by congress and the senate and signed by the President. The question is when we are out of time. The pressure weighs on the US dollar pushing up its trading partners such as the CAD.

The Canadian dollar is overvalued by more than 10 per cent, a new measure shows. Still, that pales in comparison to several other countries, according to the October reading from World Economics today. The group’s World Price Index, which recently added the Canadian dollar to the mix, looks at the value of currencies against the U.S. greenback based on a basket of goods and services at purchasing power parity. The Loonie, as the dollar coin is known in Canada, is overvalued by 10.1 per cent this month, the group said. That’s about the same as the euro in Italy, though the overvaluation is far greater in Spain and France, according to the measure.

The US$35 billion of three-month bills sold at a high rate of 0.13 per cent, well above the 0.035 per cent paid to sell the notes a week ago. The Treasury sold $30 billion in six-month bills at a high rate of 0.15 per cent, compared to 0.06 per cent in last week’s sale.

Senate Majority leader Harry Reid and Republican leader Mitch McConnell had come close to sealing an agreement that would reopen the government through Jan. 15 and permit the Treasury to borrow normally until early to mid-February. But Senate negotiations stalled during the afternoon on uncertainty over what Republicans in the House of Representatives would propose.  The Senate plan is a far cry from the assault on Obamacare that Tea Party Republicans originally demanded as a condition for a short-term funding bill to keep the government fully operational and a further increase in the debt ceiling.

Markets have been rattled lately because Democrats and Republicans have been involved in a bitter fight about raising the debt limit, which will be reached on Thursday. At that point, the U.S. government would start to run out of money to pay creditors.

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 October 16, 2013 actual v. forecast

 

Upcoming Economic Events that affect the CHF, EUR, GBP and USD

Government Bond Auction

Date Time Country 

Oct 17 08:30 Spain

Oct 17 08:50 France

Oct 17 09:30 UK

Oct 17 09:50 France

Oct 17 15:00 US