USD/CAD Weekly Fundamental Analysis November 12 –16, 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 1.0010. Although Canada printed a better than expected trade balance it matched the US same time same day. Continuous improvement has helped strengthen the US dollar while weak crude prices weigh on the CAD. Housing Starts and Building Permits also weighed on the CAD. The re-election of Obama has the same affect in Canada as it does in the US as the economies are so related. Canadian markets should be relatively quiet next week, and will probably follow the broad global tone.  Key will be that somewhat greater insight into how GDP growth ended the third quarter will be developed.  While retail sales and wholesale trade won’t arrive until the following week, manufacturing shipments will shed some perspective on how that sector is contributing to broader growth.

Canadian manufacturing sales numbers for September are released on November 15. While international merchandise trade numbers for September reflected a solid monthly increase in crude exports, there was volatility in the refined segment which has more bearing here. Machinery exports were higher in nominal terms too, but the automotive exports channel was weak, which could mitigate strength in the former area

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 November 5 – 9 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 

Nov 12 10:10 Slovakia

Nov 12 10:30 Germany

Nov 13 01:30 Japan

Nov 13 09:30 Holland

Nov 13 10:10 Greece

Nov 13 10:10 Italy

Nov 13 10:30 Belgium

Nov 13 15:30 UK

Nov 14 10:10 Italy

Nov 14 10:10 Sweden

Nov 14 10:30 Germany

Nov 14 10:30 Swiss

Nov 14 11:00 Norway

Nov 15 01:30 Japan

Nov 15 09:50 France

Nov 15 10:30 UK

Nov 15 10:50 France

Nov 15 16:00 US