USD/CAD Weekly Fundamental Analysis December 31, 2012 – January 4, 2013, Forecast

By:

Updated: Aug 21, 2015, 02:00 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 31, 2012 – January 4, 2013, 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 is trading at 0.9970 gaining on Friday. The pair began the holiday week at 0.9938 and hit a high of 0.9971 at the end of the week. The CAD saw a low this week of 0.9908. The Canadian dollar recovered last year’s losses as the growing perception of the currency as a reserve asset bolstered demand among global investors even as the nation’s commodity-led economic boom slowed.

The currency has gained 2.4 percent this year versus its U.S. counterpart, after losing 2.3 percent in 2011. The International Monetary Fund said last month that the relatively high number of central banks buying the so-called loonie and Australian dollar indicates they should be added to a category that includes the U.S. dollar and yen. Statistics Canada is forecast to show on Jan. 4 that employment growth slowed in December.

Date	Last	Open	High	Low	Change %
Dec 28, 2012	0.9970	0.9950	0.9971	0.9940	0.20%
Dec 27, 2012	0.9950	0.9939	0.9959	0.9909	0.11%
Dec 26, 2012	0.9939	0.9914	0.9951	0.9910	0.25%
Dec 25, 2012	0.9914	0.9914	0.9930	0.9910	0.00%
Dec 24, 2012	0.9914	0.9938	0.9946	0.9908	-0.24%

With gold stuck in a tight range and oil trading between the mid 86-91 price range the CAD is unable to make any traction. The US fiscal problems weigh heavily on CAD which is so dependent upon the US economy. The strong eco data this week was ignored due to the political uncertainties facing the US as lawmakers do not seem to be able to come up with a deal to resolve the fiscal cliff issue, which might lead the US to recession which would hurt the Canadian economy.

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 24 -28 actual v. forecast for the Canadian & US Dollar

Date	Currency	Event	Actual	Forecast	Previous
Dec. 27	USD	Initial Jobless Claims	350K	360K	362K
	USD	Continuing Jobless Claims	3206K	3200K	3238K
	USD	CB Consumer Confidence	65.1	70.0	71.5
	USD	New Home Sales	377K	378K	361K
Dec. 28	USD	Chicago PMI	51.6	51.0	50.4
	USD	Pending Home Sales (MoM)	1.7%	1.0%	5.0%

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

Date	Time	Currency	Event	Forecast	Previous
Jan. 01	01:00	CNY	Chinese Manufacturing PMI	51.00	50.60
Jan. 02	15:00	USD	ISM Manufacturing Index	50.2	49.5
Jan. 04	13:30	CAD	Employment Change	5.0K	59.3K