USD/CAD Fundamental Analysis May 28, 2012, Forecast

Analysis and Recommendations:

The USD/CAD saw a stronger US dollar push upwards again today, trading at 1.0286 up 0.0017 in mid day trading.

With oil prices continuing to decay and no eco data from Canada, the pair is at the sentiment of the US. Spikes in risk aversion tend to prove temporary, typically measured in weeks not months. We are firm believers that the current downside pressure on CAD will continue as long as risk aversion remains high; but that this is an interruption and not a reversal in the strong CAD trend. As the Euro‐crisis escalates traders have rapidly pared their bets for interest rate hikes by the BoC

The week has seen encouraging numbers from the U.S but the situation in Europe continue to weigh on investors. Next week could give a better indication of the U.S economic recuperation with the Nonfarm payrolls data scheduled for release. Also in line, next week is the U.S GDP figures; both heavyweight numbers could have a significant bearing on the currency and commodity prices. The recent string of weak numbers from China is raising fresh concerns about the pliability of the Chinese economy amid softening global demand and in that regards, policy easing from China could be on cards in the coming days.

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 up to the data analysis and information in our weekly reports.

Economic Data for May 25, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

May 25

 

JPY

 

 

 

Tokyo Core CPI (YoY) 

-0.8%

 

-0.6% 

 

-0.5% 

 

 

 

 

EUR

 

 

 

GfK German Consumer Climate 

5.7

 

5.6 

 

5.7 

   

 

 

CHF

 

 

 

Employment Level 

4.05M

 

4.02M 

 

4.04M 

 

 

 

 

PLN

 

 

 

Polish Unemployment Rate 

12.90%

 

12.80% 

 

13.30% 

 

 

 

 

MXN

 

 

 

Mexican Unemployment Rate 

4.9%

 

4.9% 

 

4.6% 

 

 

 

 

MXN

 

 

 

Mexican Trade Balance 

0.560B

 

1.000B 

 

1.575B 

 

 

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

 

Previous

 

May 28

Tentative

USD

Treasury Currency Report

 

 

May 29

13:00

USD

S&P/CS Composite-20 HPI y/y

-3.5%

14:00

USD

CB Consumer Confidence

69.2

 

May 30

12:30

CAD

RMPI m/m

-1.6%

14:00

USD

Pending Home Sales m/m

4.1%

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