USD/CAD Weekly Fundamental Analysis August 19 – 23, 2013 Forecast

Weekly Analysis and Recommendation:

The USD/CAD  gained less than ½ cent this week closing at 1.0330 after opening on Monday at 1.0287. Surging gold and oil prices have helped limit the drop against the US dollar. The currency dropped this week versus most major peers while the U.S. dollar climbed as American economic data bolstered bets the Federal Reserve will start slowing stimulus as soon as next month. Retail sales in Canada declined for the first time in three months in June; a report next week is forecast to show. Yields on Canadian government 10-year bonds climbed to the highest level in two years.

Foreign holdings of Canadian bonds fell by a record in June as investors retained the proceeds of maturing government securities, Statistics Canada reported yesterday. The C$19 billion ($18.4 billion) decline in the category was led by a C$10.6 billion drop in government-issued debt and another C$8.83 billion reduction in government-owned company bonds.

Canada’s currency has lost 0.7 percent this year against nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The U.S. dollar has advanced 3.9 percent, while the euro gained 5.1 percent. The loonie traded in a one-cent range this week, between C$1.0370 and C$1.0281, amid speculation the Fed will begin slowing monetary stimulus soon.

U.S. central-bank officials have been discussing when to begin tapering the pace of their $85 billion in monthly bond purchases under the quantitative-easing strategy amid an improving economy. The purchases, designed to put downward pressure on borrowing costs and spur economic growth, tend to devalue the greenback according to Bloomberg.

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 of August 12 – 16 actual v. forecast for the Canadian & US Dollar

Historical: From 2010 to present

Highest: 1.0853 CAD on May 25, 2010.

Average: 1.0090 CAD over this period.

Lowest: 0.9407  CAD on Jan 26, 2011.

 

Economic Highlights of the coming week that affect the American and Canadian Markets