USD/CAD Weekly Fundamental Analysis, November 9 – November 13, 2015 Forecast

Weekly Analysis and Recommendations:  The USD/CAD surged on Friday after the release of the stronger-than-expected U.S. Non-Farm Payrolls increased the odds of an early rate hike by the Fed from 50% to 70%. The Forex pair finished the week at 1.3299, up 0.0234, or 1.79%. 

Weaker oil prices and now expectations of a rate hike by the Fed before the end of the year should continue to drive the USD/CAD higher over the near-term. 

We did see signs of improvement in the Canadian economy on Friday. The unemployment rate dropped to 7% versus an expectation of 7.1% and 44.4K jobs were added to the Canadian economy against an expectation for a 10K increase. Looking at the internals of the report reveals, however, that over 30,000 of those jobs were related to the recent election and the rest probably related to the start of the National Hockey League season. 

The Canadian economy has been trying to grow its way out of recession territory and the improving jobs market helps, however, another sharp dip in crude oil prices could hurt the economy once again. There isn’t expected to be significant shift in the fundamentals of the crude oil market over the near-term so the Canadian Dollar is not likely to find enough support to drive it significantly higher. Falling oil prices coupled with a Fed rate hike could trigger an even steeper slide into the end of the year especially if this move is supported by another visit to the recession side of the equation. 

Forecast 

The divergence between the Canadian economy and the U.S. economy is expected to favor the USD/CAD this week. The upside momentum created by Friday’s NFP report should carry over into the market early next week. There is a chance of a profit-taking place about mid-week if investors decide to pare positions ahead of the U.S. Retail Sales report on Friday. 

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:

        Date                 Time          Curr                                            Events                                                                Forecast  Previous