USD/CAD Fundamental Forecast – February 5, 2016

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Published: Feb 4, 2016, 11:29 GMT+00:00

Analysis and Recommendations: The USD/CAD is trading at 1.3684 down 98 points as the US dollar plummets and oil rallies. The Loonie has finally returned

USD/CAD Fundamental Forecast – February 5, 2016

Analysis and Recommendations:

The USD/CAD is trading at 1.3684 down 98 points as the US dollar plummets and oil rallies. The Loonie has finally returned to life. Analysts said oil prices had recovered on a sliding dollar and from ongoing, yet unconfirmed, talk of a potential meeting of oil producers to cut output in support of prices, which have fallen around 70 percent since mid-2014.

But the main feature of recent oil trading has been volatility, with price swings of more than 10 percent within two trading sessions frequently occurring since mid-January.

“The weaker U.S. dollar provided some interim support to the commodity complex, but volatility in crude oil remains extreme. Climbing U.S. crude stocks remain an ongoing threat to further price weakness,” ANZ bank said.

In addition to the rally in oil, analysts also credited the surge in the Canadian buck to broad weakness in the U.S. dollar. The U.S. currency had its worst day in seven years against a basket of major world currencies, Bloomberg reported Wednesday.

The U.S. dollar slumped on growing expectations that the U.S. Federal Reserve will not raise interest rates as robustly as had been anticipated just weeks ago.

According to CME FedWatch, the probability of a further Fed rate hike by December is now just 39 per cent.

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:

Cur.	Event	Actual	Forecast	Previous
EUR	ECB President Draghi Speaks
GBP	BoE Inflation Report
GBP	Interest Rate Decision (Feb)	0.50%	0.50%	0.50%
GBP	BoE MPC Meeting Minutes
GBP	BoE Gov Carney Speaks

Upcoming Economic Events that you should be monitoring:

Friday, February 5, 2016

Cur.	Event	Actual	Forecast	Previous
AUD	Retail Sales (MoM) (Dec)		0.5%	0.4%
USD	Nonfarm Payrolls (Jan)		190K	292K
USD	Unemployment Rate (Jan)		5.0%	5.0%
CAD	Employment Change (Jan)		5.5K	22.8K
CAD	Ivey PMI (Jan)		50.0	49.9