USD/CAD Weekly Fundamental Analysis, November 2 – November 6, 2015 Forecast

Weekly Analysis and Recommendations:  After a rally early in the week failed to attract enough buying to keep the counter-trend move intact, the USD/CAD finished lower for the week. The Forex pair finished at 1.3065, down 0.0105, or 0.79%.

The catalyst for the rally early in the week was the release of a hawkish statement by the U.S. Federal Reserve. On October 28, the Federal Open Market Committee issued an unexpectedly hawkish monetary policy statement. The Fed also kept its benchmark interest rate unchanged as expected, but it also surprised investors by making a direct reference to its next meeting in its statement. 

“In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2 percent inflation,” it said.

The Fed also dropped a warning on global economic slowdown, a step which some believe, brings the central bank closer to a rate hike. The hawkish Fed statement raised the probability of a rate hike in December to 50 percent, up from 30 percent before the statement, according to the Fed Funds futures contract.

The rally failed after U.S. Dollar began to weaken due to weak economic data, including the preliminary GDP, new home sales and consumer spending. The Canadian Dollar found support after crude oil futures posted a strong rally. Additionally, Canada’s GDP came in above expectations.

The highlight this week will be the release of U.S. and Canadian jobs data. U.S. traders will be playing the most attention to the Average Hourly Earnings figure.

The Forex pair could see increased volatility this week because a number of Fed members are scheduled to speak. Traders will be looking for hints as to the timing of the next Fed rate hike. Fed Chair Janet Yellen is also scheduled to testify before Congress. She could move the markets if she discusses the timing of the rate hike or gives more information about the strength of the U.S. 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. 

Reports to Watch This Week:

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