USD/CAD Weekly Fundamental Analysis, August 25-29, 2014 Forecast

The USD/CAD rallied to nearly a four-month high after a government report showed the inflation rate slowed for the first time in five months in July. Further upside pressure was created by speculation the Federal Reserve is moving closer to increasing interest rates next year than the Bank of Canada.

The data showed that consumer prices rose 2.1 percent in July from a year ago according to Statistics Canada. The figure was below June’s pace of 2.4 percent and slightly below the 2.2 percent estimate. In addition to the consumer inflation figure, Canadian retail sales rose 1.1 percent in June. This number beat economist forecasts of 0.3 percent.

This week, traders will be spending most of their time reacting to the plethora of U.S. economic data. The Canadian data will be limited to Friday’s month over month GDP report which is expected to show a slight decline from 0.4% to 0.3%.

Technical factors could play a major role in this week’s price action because of overbought conditions. Friday’s weak close after Fed Chair Janet Yellen’s Jackson Hole speech suggests her comments about the U.S. economy may have been already factored into the market. While Yellen may have reiterated the Fed’s somewhat hawkish stance, the latest Canadian CPI data suggests the Bank of Canada is likely to maintain its neutral tone.

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. 

 

Economic events that traders should be aware of this coming week

Currency         Event                                                       Forecast                           Previous

Monday, August 25

USD                  Flash Services PMI                               59.2                                    60.8

USD                  New Home Sales                                  426K                                   406K

Tuesday, August 26

USD                  Core Durable Goods Orders m/m     0.5%                                   1.9%

USD                  Durable Goods Orders m/m              7.4%                                   1.7%

USD                  S&P/CS Composite 20 HPI y/y           8.2%                                   9.3%

USD                  HPI m/m                                                0.3%                                   0.4%

USD                 CB Consumer Confidence                   89.1                                     90.9

USD                 Richmond Manu. Index                         8                                           9

Thursday, August 28

CAD               Current Account                                 -11.4B                                   -12.4B

USD               Prelim GDP q/q                                     3.9%                                    4.0%

USD               Prelim GDP Price Index q/q                2.0%                                    2.0%

USD              Pending Home Sales m/m                   0.6%                                   -1.1%

Friday, August 29

CAD           GDP m/m                                                0.3%                                      0.4%

CAD           RMPI m/m                                              0.7%                                      1.1%

USD           Core PCE Price Index m/m                   0.1%                                      0.1%

USD           Personal Spending m/m                       0.1%                                     0.1%

USD           Chicago PMI                                            56.3                                      52.6

USD           Revised UoM CS                                     80.4                                      79.2