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USD/CAD Weekly Fundamental Analysis, December 24-28, 2012, Forecast

By:
Barry Norman
Updated: Aug 21, 2015, 01:00 UTC

Introduction: The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds

USD/CAD Weekly Fundamental Analysis, December 24-28, 2012, Forecast

USD/CAD Weekly Fundamental Analysis, December 24-28, 2012, Forecast
USD/CAD Weekly Fundamental Analysis, December 24-28, 2012, Forecast
Introduction: The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds to economic reports within Canada. It has little action against foreign currencies except during major moves or crisis.

The USD/CAD is the single biggest beneficiary of rising oil prices. Canada which is already the biggest exporter of oil to the US will experience a boost to its economy when oil price continue to increase. Therefore, if oil rises the Canadian dollar is likely to follow. Over the past years, the correlation between the Canadian dollar and oil prices has been approximately 81%. 

Weekly Analysis and Recommendation:

The USD/CAD traded in a range from 0.9833 to 99.53 with mostly global sentiment affecting the pair. Positive eco data in the US did little to support the US dollar this week. While the CAD saw mixed data and a fall in gold prices and oil prices helped weigh down the pair. Toward the end of the week the US gained momentum as traders moved from risk to safety abandoning commodity currencies.

Date

Last

Open

High

Low

Change %

Dec 21, 2012

0.9932

0.9877

0.9953

0.9876

0.56%

Dec 20, 2012

0.9877

0.9889

0.9896

0.9870

-0.12%

Dec 19, 2012

0.9889

0.9862

0.9892

0.9850

0.27%

Dec 18, 2012

0.9862

0.9839

0.9864

0.9833

0.23%

Dec 17, 2012

0.9839

0.9858

0.9882

0.9834

-0.19%

 The Canadian dollar hit a two-week low against its U.S. counterpart on Friday after data showed Canada’s annual inflation rate fell to a three-year low in November, adding to the cheerless mood in markets as U.S. budget talks stalled.Inflation came in at 0.8 percent, weaker than analysts’ expectations and far below the Bank of Canada’s 2.0 percent target, which means the central bank is under no pressure to raise interest rates soon. Overnight index swaps, which trade based on expectations for the central bank’s key policy rate, showed that after the data traders decreased their already small bets on a rate hike in 2013.Meanwhile, the Canadian economy eked out only a 0.1 percent gain, indicating a very slow start to the fourth quarter amid foreign and domestic economic woes.

I would like to take this time to express my best wishes to all of my readers during this holiday season and extend the best hopes for profitable trading in 2013.

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 December 17-21 actual v. forecast for the Canadian & US Dollar

Date

Time

Currency

Event

Actual

Forecast

Previous

 Dec. 17

13:30

CAD

Foreign Securities Purchases 

13.26B

10.80B

14.12B

 

13:30

USD

NY Empire State Manufacturing Index 

-8.1

-1.0

-5.2

 

14:00

USD

TIC Net Long-Term Transactions 

1.3B

25.0B

3.2B

 Dec. 18

13:30

USD

Current Account 

-107.5B

-103.4B

-118.1B

Dec. 19

13:30

USD

Building Permits 

0.899M

0.875M

0.868M

 

13:30

USD

Housing Starts 

0.861M

0.873M

0.888M

 

13:30

CAD

Wholesale Sales (MoM) 

0.9%

1.0%

-1.5%

 Dec. 20

13:30

CAD

Core Retail Sales (MoM) 

0.5%

0.2%

0.1%

 

13:30

CAD

Retail Sales (MoM) 

0.7%

0.1%

0.2%

 

13:30

USD

Initial Jobless Claims 

361K

357K

344K

 

13:30

USD

GDP (QoQ) 

3.1%

2.8%

2.7%

 

13:30

USD

Continuing Jobless Claims 

3225K

3199K

3213K

 

15:00

USD

Existing Home Sales 

5.04M

4.87M

4.76M

 Dec. 21

13:30

CAD

Core CPI (MoM) 

0.0%

0.1%

0.3%

 

13:30

USD

Core Durable Goods Orders (MoM) 

1.6%

-0.2%

1.9%

 

13:30

USD

Core PCE Price Index (MoM) 

0.0%

0.1%

0.1%

 

13:30

CAD

CPI (MoM) 

-0.2%

-0.1%

0.2%

 

13:30

USD

Durable Goods Orders (MoM) 

0.7%

0.2%

1.1%

 

13:30

CAD

GDP (MoM) 

0.1%

0.1%

0.0%

 

13:30

USD

Personal Spending (MoM) 

0.4%

0.3%

-0.1%

 

13:30

CAD

CPI (YoY) 

0.8%

1.0%

1.2%

 

14:55

USD

Michigan Consumer Sentiment 

72.9

74.7

74.5

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

There are no top tier data releases scheduled for this coming short trading week. Little action is expected and low volume. The major focus will be the US Fiscal Cliff.

Government Bond Auction

Date Time Country 

Dec 21 16:30 Italy  

Dec 26 01:30 Japan 

Dec 27 10:10 Italy  

Dec 28 10:10 Italy  

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