USD/CAD Fundamental Forecast – May 24, 2016

The USD/CAD gained 12 points to 1.3127 as the Canadian dollar continued to weaken with the wildfire continuing unabated weighing heavily on the domestic economy. Oil and gold traded in the red today also having its effect on the Loonie.  For the past couple of days, the markets have been driven by reaction to minutes from the April meeting of the Federal Reserve which showed a possible interest rate hike in mid-June is back on the table, said Philip Peterson, chief investment strategist at Manulife Investments.

“I think this is maybe just a bit of a rebound from the past couple of days that have been a little bit more negative in reaction to the Fed meeting minutes,” Peterson said.

He thinks it’s more likely the Fed will raise rates when it meets in late July, considering how close the June 14-15 meeting is to the United Kingdom’s June 23 referendum on whether it should leave the European Union.

The loonie is facing headwinds from a resurgent U.S. dollar following the news from the Fed on interest rates. However, that’s unlikely to keep dragging the commodity-sensitive loonie down, said Peterson.

While the July crude contract was down 26 cents at $48.41 a barrel, Peterson said the long-term outlook is more positive. A conservative estimate for the price of oil is $55 a barrel at some point this year, he said, and that should move the loonie higher too.

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.

Upcoming Economic Events that you should be monitoring:

Tuesday, May 24, 2016

Government Bond Auctions

Date Time       Country           Auction

May 23 N/A UK Syndicated tap of 0.125% I/L 2046 Gilt

May 23 11:03 Sweden Sek 1.25bn 0.125% Jun 2019 I/L bond

May 23 11:30 Germany Eur 1.5bn May 2017 Bubill

May 23 12:00 Norway Details of bond auction on May 25

May 23 17:20 Italy Details of Zero‐coupon/BTP€i auction

May 25 11:03 Sweden Holds bond auction

May 25 11:05 Norway Holds bond auction

May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund

May 26 11:10 Italy Announces details of bond auction

May 26 11:10 Italy Holds Zero‐coupon/BTP€i auction

May 26 17:20 Sweden Details of I/L auction on Jun 02