USD/CAD Weekly Fundamental Analysis November 26 – 30, 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 is trading at 0.9928 after starting the week on the other side of parity the pair managed to move in the right direction. Although there was little reason for the CAD to do well, except for positive data out of the US.

In Canada, the Consumer Price Index (YoY and MoM) grew by +1.2% in October, (against a consensus estimate of +1.1%), and +0.2% in October (vs. a projection of +0.1%). Moreover, the BOC Consumer Price Index Core (YoY) has climbed +1.3% in October, relative to expectations of +1.2%. In other news, the price of crude has settled at USD $87.18, up +0.07%.

This week, Q3 GDP will be released on November 30th and analysts are forecasting a 1% q/q SAAR print with risks weighted to the downside as monthly GDP-by-industry data have been very soft and don’t look much stronger in September. Economist are forecasting a 0.1% m/m print for September when it comes to the GDP-by-industry numbers, with our call premised on flat retail sales, declining housing starts, weak wholesale trade volumes, and overall weakness in the housing sector that could carry over into services output.

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 19 –23, 2012 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 26 10:30 Germany 

Nov 26 11:00 Belgium 

Nov 26 16:30 Italy  

Nov 27 01:30 Japan 

Nov 27 09:30 Holland 

Nov 27 09:30 Spain 

Nov 27 10:10 Italy  

Nov 27 15:30 UK 

Nov 27 18:00 US 

Nov 28 10:10 Italy  

Nov 28 10:10 Sweden 

Nov 28 10:30 Germany 

Nov 28 18:00 US 

Nov 29 10:10 Italy  

Nov 29 18:00 US