USD/CAD Weekly Fundamental Analysis, April 27 – May 1, 2015 – Forecast

Weekly Analysis and Recommendation: 

The USD/CAD closed the week at 1.2178 as the Looney steadily gained against the US dollar. Oil price were a significant factor in the rise of the Canadian currency while lackluster US data weighed heavily on its US counterpart.  Key risks will be compressed into a shortened work week with significant exceptions including the US and Canada. That’s because May Day — aka Labour Day, aka International Workers’ Day — will land on Friday and many global markets will be shut.

February was not a good month for the Canadian economy. We’re looking for a mild contraction and figure we have plenty of cover for the call, which we expect to play toward expectations for essentially no growth in the first quarter. Basically only utilities (during a very cold month), retail sales and existing home sales that offer mild effects on related services were probably bright spots for Canada on the path to next week’s February GDP. In volume terms, retail sales were up 1.3% m/m; home resales were up 1% m/m; manufacturing shipments fell -2.5% m/m; hours worked were flat (+0.01% m/m); housing starts fell 17.4% m/m led by a 26% m/m plunge in multis and a smaller 3.2% drop in singles; export volumes plunged 3.3% m/m and import volumes sank 1.7% as the monthly volume balance sharply deteriorated; and now wholesale trade volumes were down 0.7% m/m.

Nothing at this point can be done about the first quarter, so the pertinent question now turns to whether weakness will continue into Q2 and beyond. The BoC has staked out high ground compared to the private consensus of forecasters’ opinions on the magnitude of the rebound that lies ahead, but it is hardly alone in expecting a rebound of some sort

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week that you should be monitoring:

Government Bond Auctions

Date Time Country

Apr 27 11:10 Italy Auctions CTZ/BTPei

Apr 27 11:30 Germany Eur 1.5bn 12M (Apr 2016) Bubills

Apr 27 19:00 US Auctions 2-yr Notes

Apr 28 19:00 US Auctions 5-yr Notes

Apr 29 11:10 Italy Auctions BTPs/CCTeus

Apr 29 11:30 Germany Eur 4bn Apr 2020 Bobl

Apr 29 11:30 UK Auctions 2% 2025 Conventional Gilt

Apr 29 16:30 Sweden Details bond auction on 06 May

Apr 29 19:00 US Auctions 2-yr FRN, plus 7-yr Notes