USD/CAD Weekly Fundamental Analysis, October 20-24, 2014 Forecast

Weekly Analysis and Recommendation: 

The USD/CAD closed the week at 1.1276 after soaring above the 1.13 level as oil tumbled to new lows but recovered at the end of the week. The US dollar also reversed course midweek after hitting monthly highs and then falling only to recover late on Friday. Traders will watch the Bank of Canada rate decision this week although nothing is expected to happen.

US new single-family units, roughly two-thirds of the market, rose just 1.1 per cent in September. Permits for the category declined 0.5 per cent. It’s largely been a disappointing year for single-family construction, with starts up just 3.8 per cent through the first nine months of the year, compared to the same period in 2013.  Heading into 2014, there was hope that better job creation and still historically low interest rates would generate demand for new homes. But a cold winter stalled construction and buyers gravitated toward a growing inventory of existing homes, which tend to cost less. Sales of previously owned properties had increased for four straight months through July before falling slightly in August, according to the National Association of Realtors. 

The US labor market has added more than 200,000 jobs on average each month this year and the unemployment rate fell to 5.9 per cent in September, the lowest reading since 2008.  Lower interest rates on mortgages could also boost demand for homes late in the year. The average interest rate on a 30-year mortgage fell to 3.97 per cent this week, according to Freddie Mac. It’s the first time rates have fallen below 4 per cent in more than a year. But credit to buy a home is still difficult to attain for some consumers. “Mortgage credit really is, at this point, available really to those with pristine credit,” Federal Reserve Chairwoman Janet Yellen said last month. 

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.

Historical: From 2011 to present

Highest: 1.1270 CAD on Oct 04, 2014

Average: 1.0042 CAD over this period

Lowest: 0.9407 CAD on Jul 26, 2011

Economic Highlights of the coming week:

Upcoming Government Bond Auctions

Date Time Country 

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29