USD/CAD Fundamental Analysis Jan. 18, 2012, Forecast

Economic Events:

10:30   CAD   BoC Monetary Policy Report

11:15   CAD   BoC Gov Carney Speaks

These two reports will have no effects on the markets as the data was released today with a statement.

08:30   USD   Core PPI (MoM)   0.10%   0.10%

08:30   USD   PPI (MoM)   0.10%   0.30%

The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

09:15   USD   Industrial Production (MoM)   0.50%   -0.20%  

Industrial Production measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

Analysis and Recommendations:

Support and Resistance levels for tomorrow       S:            1.0123   1.0134   1.0146

R:            1.0169   1.018     1.0192

The Bank of Canada made no change to monetary policy on Monday, keeping its benchmark rate at one percent despite headwinds from Europe and sluggish U.S. growth.

“The outlook for the global economy has deteriorated and uncertainty has increased” in the past few months, a statement from the Bank read.

“The sovereign debt crisis in Europe has intensified, conditions in international financial markets have tightened and risk aversion has risen. The recession in Europe is now expected to be deeper and longer than the Bank had anticipated in October.”

Sill, the decision to not hold off on additional monetary stimulus was expected by economists. In recent speeches, central bankers have been hinting they are more concerned with inflation than economic weakness spilling over to Canada. Today, Canada, Germany and Sweden are the only three nations with a AAA credit rating and this has caught the attention of investors.

The USD/CAD is currently trading at 101.64 as the session closes for the day down .015%

This might be a good buy opportunity, if the US reports are at forecast or better than tomorrow, the dollar might just rally. Crude Oil has quieted down, so there is nothing pushing the looney higher against the USD.

Leave a Reply

Your email address will not be published. Required fields are marked *