USD/CAD Weekly Fundamental Analysis December 3 – 7, 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 ended the week close to parity at 0.9942 after beginning the week at 0.9933 remaining in a fairly tight range and reacting to the strength and weakness of the US dollar and global markets.

UK’s George Osborne’s appointment of Mark Carney as the next BoE Governor was a political masterstroke. There has been considerable criticism of the Bank’s forecast track record and its handling of the financial crisis. To have replaced King with Tucker to many people would have been a like-for-like swap — the King is dead, long live the King.  The question remains for Canada as to what or who do they select.

Canadian jobs numbers for November will be released on December 7, fundamentals aren’t pointing to strong labor conditions.

Entering 2013, the US Federal Reserve is expected to expand its quantitative easing (QE) program again; this balance sheet expansion, juxtaposed against the Bank of Canada’s neutral to hawkish stance, is likely to prove a significant support for CAD. The lack of a US fiscal plan is expected to create waves of uncertainty, but on balance should weigh on the USD over time. From the Canadian perspective the established fiscal plan, low net debt levels and triple-A rating serves to drive investment flows into Canada and drives CAD higher.

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 November 26 – 30 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

Government Bond Auction

Date Time Country 

Dec 03 10:30 Germany 

Dec 04 01:30 Japan 

Dec 04 10:30 Belgium 

Dec 04 15:30 UK 

Dec 05 09:30 Spain 

Dec 05 10:30 Germany 

Dec 05 11:00 Norway 

Dec 05 15:30 Sweden 

Dec 06 01:30 Japan 

Dec 06 09:50 France 

Dec 06 16:00 US 

Dec 07 16:30 Italy