USD/CAD Forecast April 12, 2012, Technical Analysis

 

The USD/CAD pair fell for most of the session on Wednesday as the market tried to recover some of its “risk on” appetite in general. However, but the end of the session we saw a significant bounce, and the daily candle was a hammer.

This is significant because it not only formed “on top” of the parity level, but also the 200 day EMA – an exponential moving average that many longer-term trend traders will use. This is a very bullish turn of events, and a break of the top of the Wednesday highs will signal a buying opportunity, knowing that the 1.01 level is still resistive and could put up a good fight. Because of this, the more cautious of you out there could wait until a daily close above the aforementioned 1.01 level. Selling isn’t even a thought at this point.

USD/CAD Forecast April 12, 2012, Technical Analysis
USD/CAD Forecast April 12, 2012, Technical Analysis

USD/CAD Fundamental Analysis April 12, 2012, Forecast

Analysis and Recommendations:

The USD/CAD 1.0023 as the USD has been able to remain strong. In Canada today, the housing report showed that those 216K new homes were under construction coming in much higher then forecast. The drop in crude oil prices from a 107 level to close to the 100.00 price has a negative effect on the CAD as Canada is a major exporter of crude to the US.

In the US, the prices paid for goods imported into the U.S. jumped 1.3% in March, mainly because of higher oil costs, the Labor Department said Wednesday. That compared to a revised 0.1% decrease in February.

Shares of the nation’s largest homebuilders rallied sharply on Wednesday after data from a Wells Fargo survey was strong. The firm’s survey of sales managers in 20 markets showed staying power across all categories.

Bullish sentiment fell among financial advisers surveyed in the weekly Investors’ Intelligence poll from last Friday. The percentage of financial advisers who are bullish on the market fell to 48.4% from 52.7%, while bearish sentiment was unchanged at 21.5%.

Markets are waiting for the U.S. Federal Reserve Beige Book, the Fed’s official assessment on economic conditions in the 12 Federal Reserve districts due later today. The report is released exactly two weeks before the Fed’s next monetary policy meeting on April 24-25, the Beige Book report should confirm the signs of consistent improvement in the U.S. economy, lessening the likelihood of more quantitative easing by the U.S. central bank. As long as QE3 odds remain low, the USD should benefit.

Economic Reports April 11, 2012 actual v. forecast

Apr. 11

 

AUD

 

 

 

Westpac Consumer Sentiment 

-1.60%

 

 

 

-5.00% 

 

 

 

 

AUD

 

 

 

Home Loans (MoM) 

-2.5%

 

-3.5% 

 

-1.1% 

   

 

 

JPY

 

 

 

BoJ Monthly Report 

 

 

 

 

 

 

 

 

 

HUF

 

 

 

Hungarian CPI (YoY) 

5.5%

 

5.7% 

 

5.9% 

 

 

 

 

EUR

 

 

 

German 10-Year Bund Auction 

1.770%

 

 

 

1.830% 

 

 

 

 

CAD

 

 

 

Housing Starts 

216K

 

200K 

 

205K 

   

 

 

USD

 

 

 

Import Price Index (MoM) 

1.3%

 

0.8% 

 

-0.1% 

   

 

Economic Events for April 12, 2012

06:30     EUR       French CPI (MoM)                                                                          0.4%                     

The French Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

08:30     EUR       Dutch Retail Sales (YoY)                                                               0.80%                  

Retail trade is a form of trade in which goods are mainly purchased and resold to the consumer or end-user, generally in small quantities and in the state in which they were purchased (or following minor transformations).

09:30     GBP      Trade Balance                                                 -7.7B                      -7.5B                     

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

10:00     EUR       Industrial Production (MoM)                        -0.2%                     0.2%                     

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

10:00     EUR       Portuguese CPI (MoM)                                                                 0.10%

The Consumers Price Index (CPI) measures the rate of price change of goods and services purchased by households. It measures changes in the average level of prices over a period of time. In other words, prices indicator of what is happening to prices consumers are paying for items purchased. With a given starting point or base period which is usually taken as 100, the CPI can be used to compare current period consumer prices with those in the base period. Consumer Price index is the most frequently used indicator of inflation and reflect changes in the cost of acquiring a fixed basket of goods and services by the average consumer. The weights are usually derived from household expenditure surveys.                           

10:00     EUR       Greek Unemployment Rate                                                      21.00%  

The definition for an unemployed person is: Persons (16-65 years) who were available for work (except for temporary illness) but did not work during the survey week, and who made specific efforts to find a job within the previous 4 weeks by going to an employment agency, by applying directly to an employer, by answering a job ad, or being on a union or professional register. The percentage number is calculated unemployed / (employed + unemployed).

13:30     CAD      Trade Balance                                                2.0B                       2.1B

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

13:30     USD      Core PPI (MoM)                                              0.2%                      0.2%

13:30     USD       PPI (MoM)                                                       0.3%                      0.4%                     

The Core Producer Price Index (PPI) measures the change in the selling price of goods and services sold by producers, excluding food and energy. The PPI measures price change from the perspective of the seller. When producers pay more for goods and services, they are more likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation.  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. 

13:30     USD       Trade Balance                                               -52.0B                   -52.6B    

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

13:30     USD      Initial Jobless Claims                                   355K                      357K                     

 13:30    USD       Continuing Jobless Claims                        3335K                    3338K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.       

Government Bond Auctions April 10-20, 2012

Apr 12  09:10  Italy   BTP/CCTeu auction

Apr 12  09:30  UK  Gbp 2.0bn 4.25% Jun 2032 Conventional Gilt

Apr 12  15:00  US  Announces auction of 5Y TIPS on Apr 19

Apr 12  17:00  US  Auctions 30Y Bonds

Apr 13  10:00  Belgium  OLO mini bond auction

Apr 16-30 n/a  UK Re-opened 3.75% 2052 Conventional Gilt syndication

Apr 16  09:10  Slovakia  Auctions floating rate Nov 2016 & 4.35% Oct 2025 & Bonds

Apr 16  09:10  Norway  T-bill auction

Apr 17  08:30  Spain  12 & 18M T-bill auction

Apr 17  09:30  Belgium  Auctions 3 & 12M T-bills

Apr 18  09:10  Sweden  Nominal bond auction

Apr 18  09:30  Germany  Eur 5.0bn 0.25% Mar 2014 Schatz

Apr 18  14:30  Sweden  Details T-bill auction on Apr 25

Apr 19  08:30  Spain  Obligacion auction

Apr 19  08:50  France  BTAN auction

Apr 19  09:30  UK  Auctions 0.125% I/L Gilt 2029

Apr 19  09:50  France  OATi auction

 

 

In The Eyes of the Experts – 11/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • CHF
  • EUR

 

Currencies watch for Short:

  • CAD
  • USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD    1.2999    1.3035    1.3089    1.3125    1.3179   
GBPUSD 1.5740 1.5795 1.5862 1.5917 1.5984
USDJPY 79.79 80.23 81.04 81.48 82.29
USDCHF 0.9116 0.9152 0.9181 0.9217 0.9245
USDCAD 0.9916 0.9981 1.0014 1.0080 1.0113
AUDUSD 1.0139 1.0182 1.0269 1.0312 1.0398

USD/CAD Forecast April 11, 2012, Technical Analysis

The USD/CAD pair shot straight up during the session on Tuesday as the oil markets fell. The “risk off” attitude came back into the markets, and the Dollar was bid up against most currencies, with the Canadian dollar being no exception. The parity level has been very resistive, but it looks like the market is about to slice through the resistance.

The market is now back above the 200 day EMA, something that it hasn’t been able to claim since the very start of the year. The market looks as if it breaks out if it closes above the 1.01 level. Until then, we are waiting to see if the bulls can make things happen. Selling is possible, but we need to see weakness – something that hasn’t happened at all. 

USD/CAD Forecast April 11, 2012, Technical Analysis
USD/CAD Forecast April 11, 2012, Technical Analysis

USD/CAD Fundamental Analysis April 11, 2012, Forecast

Analysis and Recommendations:

The USD/CAD soared in today’s session. The greenback picked up strength throughout the day as investors moved to the safety of the USD and other safe haven assets. Gold and the Japanese yen were up today also. The USD broke the 1.00 level today to trade as high as 1.0039 and is currently trading at 1.0033.

Crude oil continued its decline which is a negative for the CAD, as Canada is a large exporter of oil.

Wednesday will bring us Home Starts figures for Canada and also US Federal Budget Balance, which could move the USD.

Economic Data for April 10, 2012 actual v. forecast

 

GBP

 

 

 

RICS House Price Balance 

-10%

 

-12% 

 

-13% 

 

 

 

USD

 

 

 

Fed Chairman Bernanke Speaks 

 

 

 

 

 

 

 

 

AUD

 

 

 

NAB Business Confidence 

3

 

 

 

 

 

 

CNY

 

 

 

Chinese Trade Balance 

5.3B

 

-1.3B 

 

-31.5B 

 

 

 

JPY

 

 

 

Interest Rate Decision 

0.10%

 

0.10% 

 

0.10% 

 

 

 

CHF

 

 

 

Unemployment Rate 

3.1%

 

3.1% 

 

3.1% 

 

 

 

DKK

 

 

 

Danish CPI (YoY) 

2.70%

 

2.70% 

 

2.80% 

 

 

 

JPY

 

 

 

BoJ Press Conference 

 

 

 

 

 

 

 

 

NOK

 

 

 

Norwegian Core Inflation (MoM) 

0.40%

 

0.30% 

 

0.70% 

 

 

 

NOK

 

 

 

Norwegian CPI (MoM) 

-0.10%

 

-0.10% 

 

1.00% 

 

 

Economic Events for April, 11, 2012

02:30     AUD      Home Loans (MoM)                                      -3.5%                     -1.2%      

Home Loans record the change in the number of new loans granted for owner-occupied homes. It is a leading indicator of demand in the housing market.

13:15     CAD      Housing Starts                                               200K                      201K

Housing starts measures the change in the annualized number of new residential buildings that began construction during the reported month. It is a leading indicator of strength in the housing sector.   

13:30     USD      Import Price Index (MoM)                              0.8%                     0.4%     

The Import Price Index measures the change in the price of imported goods and services purchased domestically.

19:00     USD      Federal Budget Balance                                -201.5B                 -232.0B

The Federal Budget Balance measures the difference in value between the federal government’s income and expenditure during the reported month. A positive number indicates a budget surplus; a negative number indicates a deficit. 

Government Bond Auctions April 10-20, 2012

Apr 11  09:10  Italy   BOT auction

Apr 11  09:30  Germany  Eur 5.0bn new Jul 2022 Bund

Apr 11  09:10  Sweden  Sek 5.0bn Jul 2012 & Sek 5.0bn Sep 2012 T-bills

Apr 11  09:30  Swiss  Bond auction

Apr 11  09:30  UK  Gbp 4.5bn 1.0% Sep 2017 Conventional Gilt

Apr 11  10:00  Norway  Details T-bill auction on Apr 16

Apr 11  14:30  Sweden  Details nominal bond auction on Apr 18

Apr 11  17:00  US  Auctions 10Y Notes

Apr 12  09:10  Italy   BTP/CCTeu auction

Apr 12  09:30  UK  Gbp 2.0bn 4.25% Jun 2032 Conventional Gilt

Apr 12  15:00  US  Announces auction of 5Y TIPS on Apr 19

Apr 12  17:00  US  Auctions 30Y Bonds

Apr 13  10:00  Belgium  OLO mini bond auction

Apr 16-30 n/a  UK Re-opened 3.75% 2052 Conventional Gilt syndication

Apr 16  09:10  Slovakia  Auctions floating rate Nov 2016 & 4.35% Oct 2025 & Bonds

Apr 16  09:10  Norway  T-bill auction

Apr 17  08:30  Spain  12 & 18M T-bill auction

Apr 17  09:30  Belgium  Auctions 3 & 12M T-bills

Apr 18  09:10  Sweden  Nominal bond auction

Apr 18  09:30  Germany  Eur 5.0bn 0.25% Mar 2014 Schatz

In The Eyes of the Experts – 10/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • USD

 

Currencies watch for Short:

  • NZD
  • GBP

 

Today’s important times (GMT+2):

  • 19:45 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD 1.2990 1.3049 1.3091 1.3149 1.3191
GBPUSD 1.5805 1.5855 1.5884 1.5933 1.5962
USDJPY 81.06 81.34 81.50 81.78 81.94
USDCHF 0.9112 0.9141 0.9178 0.9207 0.9244
USDCAD 0.9929 0.9947 0.9974 0.9991 1.0018
AUDUSD    1.0222    1.0263    1.0297    1.0338    1.0372   

USD/CAD Forecast April 10, 2012, Technical Analysis

The USD/CAD pair has risen during the Monday session, only to fall again and form a shooting star. This market is currently trading just below the 200 day EMA, and the parity level as well. The pair looks as if it still wants to trade within the same range that we have been trading in during the last two months.

The oil markets also formed a hammer, looking to perhaps go higher. Because of this, we think that a break down below the bottom of the session lows of the shooting star will be a solid sell signal in this pair as oil climbs again. Because of this, we are selling on a break of the lows for the Monday session. However, we also recognize this pair is probably only going to produce 50 pips or so as the range is fairly tight. 

USD/CAD Forecast April 10, 2012, Technical Analysis
USD/CAD Forecast April 10, 2012, Technical Analysis

USD/CAD Fundamental Analysis April 10, 2012, Forecast

Analysis and Recommendations:

The USD/CAD opened after the holiday weekend and is holding at 0.9985

CAD is weak leading into the North American open, but still well within its nine‐week range. Thursday’s strong Canadian report (where +82k jobs were added) was met with a rally in CAD, which closed the day up +0.3% against the USD and +1.0% against EUR; however CAD was more sensitive than other currencies to the weaker than expected nonfarm payrolls on Friday and gave up these gains. Today’s data includes the BoC Q1 business outlook.

Economic Data April 9, 2012 actual v. forecast

Apr. 09

 

JPY

 

 

 

Adjusted Current Account 

0.85T

 

0.66T 

 

0.14T 

   

 

 

CNY

 

 

 

Chinese CPI (YoY) 

3.6%

 

3.3% 

 

3.2% 

 

 

 

 

CNY

 

 

 

Chinese PPI (YoY) 

-0.3%

 

-0.2% 

 

0.0% 

 

 

 

 

JPY

 

 

 

Economy Watchers Current Index 

51.8

 

46.5 

 

45.9 

 

 

 

 

RUB

 

 

 

Russian Interest Rate Decision 

8.00%

 

8.00% 

 

8.00% 

 

 

 

 

TRY

 

 

 

Turkish Industrial Production (YoY) 

4.40%

 

3.50% 

 

1.50% 

 

 

 

 

TWD

 

 

 

Taiwanese Trade Balance 

2.36B

 

2.19B 

 

2.83B 

 

 

 

 

EUR

 

 

 

Greek CPI (YoY) 

1.70%

 

 

 

2.10% 

 

 

 

 

EUR

 

 

 

Greek Industrial Production (YoY) 

-8.30%

 

 

 

-5.00% 

 

 

 

 

EUR

 

 

 

Portuguese Trade Balance 

-2.88B

 

 

 

-3.08B 

 

 

 

 

CLP

 

 

 

Chilean Trade Balance 

0.91B

 

0.83B 

 

0.63B 

 

 

 

 

MXN

 

 

 

Mexican CPI (YoY) 

3.73%

 

3.77% 

 

3.87% 

 

 

 

 

USD

 

 

 

CB Employment Trends Index 

107.28

 

 

 

107.47 

   

 

 

Economic Events for April 10, 2012

00:01     GBP      RICS House Price Balance                           -12%                      -13%     

The Royal Institution of Chartered Surveyors (RICS) House Price Balance measures the percentage of surveyors reporting a house price increase in their designated area. A level above 0.0% indicates more surveyors reported a rise in prices; below indicates more reported a fall. The report is a leading indicator of house price inflation as surveyors have access to the latest price data.

00:15     USD      Fed Chairman Bernanke Speaks

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to speak. As head of the Fed, which controls short term interest rates, he has more influence over the U.S. dollar’s value than any other person. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.        

06:45     CHF       Unemployment Rate                                     3.1%                      3.1%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.

08:00     DKK       Danish CPI (YoY)                                             2.70%                    2.80%   

The purpose of the consumer price index is to measure the development of the prices charged to consumers for goods and services bought by private households in Denmark. The consumer price index is used as a measurement of inflation and is a key economic figure, which is used by a large number of public and private companies and interested members of the general public in connection with monitoring economic developments. Furthermore, the index is used for regulating (indexation) contracts, pensions, wages and salaries, rents, etc. The index weights for the detailed indices (elementary aggregate indices) are calculated on the basis of data from the national accounts on final consumption expenditure of households in Denmark, supplemented by detailed information from the Household Budget Survey.    

  17:30   USD       FOMC Member Fisher Speaks

Federal Reserve Bank of Dallas President and Federal Open Market Committee (FOMC) voting member (2008 and 2011) Richard Fisher is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy

Government Bond Auctions April 10-20, 2012

Apr 10  08:30  Holland  Eur 2.5-3.5bn reopened Jan 2017 DSL auction

Apr 10  09:15  Austria  Eur 1.32bn 3.2% Feb 2017 & 3.4% Nov 2022 RAGBs

Apr 10  14:30  UK  Details I/L Gilt auction on Apr 19

Apr 10  17:00  US  Auctions 3Y Notes

Apr 11  09:10  Italy   BOT auction

Apr 11  09:30  Germany  Eur 5.0bn new Jul 2022 Bund

Apr 11  09:10  Sweden  Sek 5.0bn Jul 2012 & Sek 5.0bn Sep 2012 T-bills

Apr 11  09:30  Swiss  Bond auction

Apr 11  09:30  UK  Gbp 4.5bn 1.0% Sep 2017 Conventional Gilt

Apr 11  10:00  Norway  Details T-bill auction on Apr 16

Apr 11  14:30  Sweden  Details nominal bond auction on Apr 18

Apr 11  17:00  US  Auctions 10Y Notes

Apr 12  09:10  Italy   BTP/CCTeu auction

Apr 12  09:30  UK  Gbp 2.0bn 4.25% Jun 2032 Conventional Gilt

Apr 12  15:00  US  Announces auction of 5Y TIPS on Apr 19

Apr 12  17:00  US  Auctions 30Y Bonds

Apr 13  10:00  Belgium  OLO mini bond auction

Apr 16-30 n/a  UK Re-opened 3.75% 2052 Conventional Gilt syndication

Apr 16  09:10  Slovakia  Auctions floating rate Nov 2016 & 4.35% Oct 2025 & Bonds

Apr 16  09:10  Norway  T-bill auction

Apr 17  08:30  Spain  12 & 18M T-bill auction

Apr 17  09:30  Belgium  Auctions 3 & 12M T-bills

Apr 18  09:10  Sweden  Nominal bond auction

Apr 18  09:30  Germany  Eur 5.0bn 0.25% Mar 2014 Schatz

Apr 18  14:30  Sweden  Details T-bill auction on Apr 25

Apr 19  08:30  Spain  Obligacion auction

Apr 19  08:50  France  BTAN auction

Apr 19  09:30  UK  Auctions 0.125% I/L Gilt 2029

Apr 19  09:50  France  OATi auction

Apr 19  15:00  US Announces 2Y Notes on Apr 24, 5Y Notes on Apr 25 & 7Y Notes on Apr 26

Apr 19  17:00  US  Auctions 5Y TIPS 

Apr 20  15:30  Italy   Details CTZ/BTPei on Apr 24 & BOT on Apr 26

In The Eyes of the Experts – 9/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY

 

Currencies watch for Short:

  • CAD
  • USD
  • GBP

 

Today’s important times (GMT+2):

  • 17:30 CAD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD 1.3022 1.3060 1.3085 1.3123 1.3149
GBPUSD 1.5796 1.5834 1.5862 1.5901 1.5928
USDJPY 80.54 81.03 81.78 82.27 83.03
USDCHF 0.9130 0.9147 0.9176 0.9193 0.9225
USDCAD 0.9884 0.9929 0.9957 0.9998 1.0025
AUDUSD    1.0241    1.0275    1.0305    1.0338    1.0368   

USD/CAD Forecast April 9, 2012, Technical Analysis

The USD/CAD pair rose during the session as the Non-Farm Payroll numbers came out at 120, 000 jobs were added last month, versus the 200,000 expected. The 200 EMA is just above the parity level that has been acting as such resistance lately. The pair is most certainly a short-term traders market, and as a result this is exactly how we trade it. We know the trend is certainly down, so our favorite trade at the moment is to sell every time we get to parity, and close out the trade at a gain of 50 pips. 

USD/CAD Forecast April 9, 2012, Technical Analysis
USD/CAD Forecast April 9, 2012, Technical Analysis

USD/CAD Forecast for the Week of April 9, 2012, Technical Analysis

The USD/CAD pair has been tight for some time. The range bound action in this pair has made it very difficult to trade unless you are willing to scalp. The chart has nothing in it at the moment to suggest that the choppiness is about to change. 

However, we do have some levels to pay attention to as they could signal a move. The parity level has been very resistive since the start of the year, and at the moment we are simply bouncing between parity and 0.99 or so. Our levels are 1.01 and the 0.98 handle. If we manage to break above the 1.01 level, we are ready to buy. If the 0.98 level gets broken to the downside, we are ready to sell. Until then, we have no long-term trades. 

USD/CAD Forecast for the Week of April 9, 2012, Technical Analysis
USD/CAD Forecast for the Week of April 9, 2012, Technical Analysis

USD/CAD Monthly Fundamental Forecast April 2012

Outlook and Recommendation

Investor sentiment indicators are bullish. The USD/CAD is currently trading at 0.9971.

For the month of March see the table below for the trading range:

Highest: 1.0019

Lowest: 0.9901

Difference: 0.0118

Average: 0.9961

Change %: -0.0100

 

Since the end of January, the Canadian dollar (CAD) has been stuck in a tight 210 point range (0.9949 to 1.0160) and on a year-to-date basis has been a mid-performer.

The dominant factor driving the North American currency forecast is the outlook for the US economy (and employment) in addition to oil prices, central bank policy and shifts at the long end of the US Treasury yield curve. The US dollar (USD) is supported by an improving economic backdrop, flows into US securities markets and a weakening outlook for both the yen and euro; however, US central bank policy and elevated oil prices are significant weights against the USD. There are three major themes currently driving CAD:

1) high oil prices;

2) loose global central bank policy juxtaposed against the Bank of Canada’s neutral stance; and

3) the outlook for US and Chinese growth.

Europe remains a important driver, but is impacting CAD more in how global central banks are reacting as opposed to headline risk that was the theme in late 2011. CAD continues to exhibit a pattern in which it rises less than its more volatile peer currencies in periods of risk appetite, and sees a lesser degree of decline in periods of risk aversion. Technicals are less important in range-bound environments, and so we turn to fundamentals for the outlook for CAD.  Given Canada’s strong ties to a moderately improving economic outlook in the US, elevated commodity prices and the reduction of tail risks in global financial markets that has dampened volatility, CAD should be strong. In addition, the recent release of the federal budget is also CAD positive, given that the government is expected to eliminate its fiscal deficit by the middle of the decade. 

Canada’s top credit rating serves it well given the narrowing universe of AAA rated sovereigns, and central bank reserve data suggests that portfolio investment in CAD-denominated assets is an ongoing trend. Sentiment indicators see investors maintain a net long CAD position that has held since early February, and one that remains the third largest long against the USD, where most of the other majors are held net short. However, the Canadian real estate sector and household balance sheets are risks as is the disappointing string of recent domestic data. Overall, we expect that the continued economic expansion in North America, a soft landing in China,. Key risks include: a rapid decline in European growth, contagion into Spain or Italy, evidence of a hard landing in China or a suddenly hawkish Federal Reserve, however these are risks and not part of our base case.  We see the CAD rising to trade at 1.00-1.02

Central Bank

The Bank of Canada -BOC INTEREST RATE DECISION

Previous:  1%

BoC Interest Rate Decision is announced by the Bank of Canada. If the BoC is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the CAD. Likewise, if the BoC has a dovish view on the Canadian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

FED INTEREST RATE DECISION

Previous:  0.25%

The Board of Governors of the Federal Reserve announces an interest rate. This interest rate affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the exchange rate. Generally speaking, if the Fed is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the USD.

USD/CAD Weekly Fundamental Analysis April 9-13, 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%. 

Analysis and Recommendation:

The USD/CAD traded between 0.9998 ( high ) and 0.9888 ( low ) this week. There were several positive reports in Canada all coming towards the end of the week.

The disappointment was the drop in the Ivey PMI, which fell to 63.5 from expectation of 66.0, although still a positive reading. The surprise this week was building permits and unemployment, which both came in well above forecast, giving some added strength to the CAD.

The Looney was fighting against very strong data out of the US and the release of the FOMC minutes which pushed the USD upwards against all of its trading partners.

Also a fall in commodities prices this week also hurt the CAD as gold and oil both fell.

Date

Last

Open

High

Low

Change %

04/06/2012

0.9918

0.9932

0.9934

0.9918

-0.14%

04/05/2012

0.9932

0.9965

0.9998

0.9907

-0.33%

04/04/2012

0.9964

0.9912

0.9974

0.9908

0.52%

04/03/2012

0.9912

0.9902

0.9929

0.9888

0.10%

04/02/2012

0.9902

0.9964

0.9990

0.9889

-0.62%

04/01/2012

0.9963

0.9960

0.9964

0.9952

0.03%

 

Economic Data from Canada for the week of April 2-6, 2012 actual v. forecast

Apr. 05 

13:30

 

CAD

 

 

Building Permits (MoM) 

7.5%

 

3.0% 

 

-11.4% 

   

 

13:30

 

CAD

 

 

Employment Change 

82.3K

 

10.0K 

 

-2.8K 

 

 

 

13:30

 

CAD

 

 

Unemployment Rate 

7.2%

 

8.0% 

 

7.4% 

 

 

 

15:00

 

CAD

 

 

Ivey PMI 

63.5

 

66.0 

 

66.5 

 

 

 

Economic Data from the USA for the week of April 2-6, 2012 actual v. forecast

Apr. 02

 

USD

 

 

 

ISM Manufacturing Index 

53.4

 

53.0 

 

52.4 

 

 

Apr. 03

 

USD

 

 

 

FOMC Meeting Minutes 

 

 

 

 

 

 

 

Apr. 04

 

USD

 

 

 

ADP Nonfarm Employment Change 

209K

 

200K 

 

230K 

   

Apr. 05

 

USD

 

 

 

Initial Jobless Claims 

357K

 

355K 

 

363K 

   

Apr. 06

 

USD

 

 

 

Nonfarm Payrolls 

120K

 

203K 

 

240K 

   

 

 

USD

 

 

 

Unemployment Rate 

8.2%

 

8.3% 

 

8.3% 

 

 

 

 Historical:

Highest: 1.0842 CAD on 01 Nov 2009.

Average: 1.0147 CAD over this period.

Lowest: 0.9435 CAD on 26 Jul 2011.

Economic Events (GMT)

Economic Highlights of the coming week for the USA (only minor reports, a very light week)

Apr. 9 

15:00

 

USD

 

 

 

CB Employment Trends Index 

 

 

 

 

107.50 

 

 

Apr 10 

12:30

 

USD

 

 

 

NFIB Small Business Optimism 

 

 

 

 

94.3 

 

 

 

13:55

 

USD

 

 

 

Redbook (MoM) 

 

 

 

 

0.70% 

 

 

 

15:00

 

USD

 

 

 

Wholesale Inventories (MoM) 

 

 

0.5% 

 

0.4% 

 

 

 

15:00

 

USD

 

 

 

IBD/TIPP Economic Optimism 

 

 

 

 

47.5 

 

 

 

21:30

 

USD

 

 

 

API Weekly Crude Stock 

 

 

 

 

7.85M 

 

 

 

21:30

 

USD

 

 

 

API Weekly Gasoline Stock 

 

 

 

 

-4.46M

   

 

Economic Highlights of the coming week that affect the Canadian Dollar.

 Apr. 11 

13:15

 

CAD

 

 

 

Housing Starts 

 

 

 

 

201K 

 

 

 Apr. 12 

13:30

 

CAD

 

 

 

Trade Balance 

 

 

 

 

2.1B 

   

 

USD/CAD Fundamental Analysis April 9, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is exchanging at 0.9971 as the USD gained a bit in late day trading.

It is a very quiet day, with global markets closed for the holiday weekend.

The Non Farms Payroll data showed for the first time since November that job growth dropped below the 200,000 level. Economists expected a rise of 210,000. The unemployment rate fell to 8.2% from 8.3%, mostly because more people dropped out of the work force.

In the forex markets, the dollar fell against other major currencies, posting a particularly steep drop against the Japanese yen, which tends to be seen as a safe-haven currency.

Economic Reports for April 6, 2012 actual v. forecast

Apr. 06

 

JPY

 

 

 

Leading Index 

96.6

 

95.6 

 

94.5 

   

 

 

EUR

 

 

 

French Government Budget Balance 

-24.2B

 

 

 

-12.5B 

 

 

 

 

EUR

 

 

 

French Trade Balance 

-6.4B

 

-5.2B 

 

-5.6B 

   

 

 

HUF

 

 

 

Hungarian Industrial Output (YoY) 

1.10%

 

-1.00% 

 

-0.50% 

 

 

 

 

USD

 

 

 

Average Hourly Earnings (MoM) 

0.2%

 

0.2% 

 

0.3% 

   

 

 

USD

 

 

 

Nonfarm Payrolls 

120K

 

203K 

 

240K 

   

 

 

USD

 

 

 

Unemployment Rate 

8.2%

 

8.3% 

 

8.3% 

 

 

 

 

USD

 

 

 

Average Weekly Hours 

34.5

 

34.5 

 

34.6 

   

 

 

USD

 

 

 

Private Nonfarm Payrolls 

121K

 

218K 

 

233K 

 

 

 

 

USD

 

 

 

ECRI Weekly Annualized (WoW) 

1.00%

 

 

 

-0.40% 

 

 

 

Economic Events scheduled for April 9, 2012

02:30     CNY      Chinese CPI (YoY)           3.3%                      3.2%

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                            

02:30     CNY      Chinese PPI (YoY)                                           -0.2%      

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.                                    

 10:00    EUR       Greek CPI (YoY)                                              2.10%

Consumer Price index is the most frequently used indicator of inflation and reflect changes in the cost of acquiring a fixed basket of goods and services by the average consumer. 

In The Eyes of the Experts – 6/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • AUD
  • NZD
  • CAG

 

Currencies watch for Short:

  • JPY
  • CHF

 

Today’s important times (GMT+2):

  • 15:30 USD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD 1.2957 1.3009 1.3085 1.3138 1.3215
GBPUSD 1.5743 1.5785 1.5846 1.5888 1.5949
USDJPY 81.52 81.86 82.15 82.49 82.78
USDCHF 0.9108 0.9154 0.9187 0.9233 0.9266
USDCAD 0.9853 0.9892 0.9944 0.9983 1.0035
AUDUSD    1.0217    1.0255    1.0288    1.0326    1.0359   

USD/CAD Forecast April 6, 2012, Technical Analysis

 

The USD/CAD pair fell after touching the parity level on Thursday as we had predicted. This pair is currently one of the most reliable ones in the sense that it has been so range bound. With this being said, it has been a pair that has been controlled by the oil markets, which are being controlled by a lot of different forces at the moment.

The parity level still looks very strong, and it has the 200 day EMA above it as well, and this should continue to keep the pair down. As long as there is uncertainty in the Middle East we will see a certain amount of a bid in the oil markets in general. The Canadian jobs report came out on Thursday as well, and it was a blowout number. Canada added 82,000 jobs last month, and this is about 8 times more than expected. With that being said, the Loonie was always going to gain against the Dollar.

The oil markets have been sliding, but there is a lot of uncertainty in that commodity and more specifically the movement of it, so the fall has been a bit of a grind, keeping the Loonie from falling in value too quickly.

The 0.98, 0.9750, and 0.97 levels all should be supportive too, so we don’t see this pair falling too rapidly either way. It is almost like it is simply too weak to rise, rather than overly bearish. In a world where there is a lot of uncertainty, the Dollar will always have at least some kind of a bid, so this will keep it from melting down as well. The pair has a long history of being choppy, so the simplest trade is almost always the best one as a filter to keep the noise out.

The selling of rallies continues to be our play. Selling close or at parity certainly has worked out lately, and we will continue to do so. The buying of this pair isn’t able to be done until we get above the 1.01 level on a daily close as it shows a momentum change. We are currently trading this pair for the short-term only.

USD/CAD Forecast April 6, 2012, Technical Analysis
USD/CAD Forecast April 6, 2012, Technical Analysis

USD/CAD Fundamental Analysis April 6, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading for 0.9927 after hitting a high of 0.9998. The USD traded higher against all of its trading partners except here, where the greenback was in a tug of war with the Looney. Canada today released surprising figures showing a huge drop in unemployment. The projected rate as 8.0%, the previous rate was 7.4% and the actual was 7.2%. The same was true for employment change, the forecast was 10k and the actual was 82.3k showing a huge amount of jobs were being created. To top that off, building permits which were forecast at 3.0% a significant rise from last month of -11.4% reported in at 7.5%. This provided the needed strength to the CAD to survive negative results from the Ivey PMI which came in under forecast at 63.5 but still positive.

The USD in earlier trading was as high as 0.9998 when the CAD was able to gather strength to push the USD down. In the US unemployment figures were positive also showing the number of Americans who filed requests for jobless benefits fell by 6,000 last week to 357,000, the U.S. Labor Department said Thursday. Economists had projected claims would total 360,000.

On Friday the US will release the Non Farms Payroll reports and this will determine who will end up on top in the employment numbers game.

Economic Events April 5, 2012 actual v. forecast

 

CHF

 

 

 

CPI (MoM) 

0.6%

 

0.4% 

 

0.3% 

 

 

 

EUR

 

 

 

Dutch CPI (YoY) 

2.50%

 

2.20% 

 

2.50% 

 

 

 

GBP

 

 

 

Industrial Production (MoM) 

0.4%

 

0.3% 

 

-0.6% 

   

 

GBP

 

 

 

Manufacturing Production

-1.0%

 

0.1% 

 

-0.3% 

   

 

GBP

 

 

 

Interest Rate Decision 

0.50%

 

0.50% 

 

0.50% 

 

 

 

GBP

 

 

 

BOE QE Total 

325B

 

325B 

 

325B 

 

 

 

BRL

 

 

 

Brazilian CPI (YoY) 

5.2%

 

5.4% 

 

5.8% 

 

 

 

CAD

 

 

 

Building Permits (MoM) 

7.5%

 

3.0% 

 

-11.4% 

   

 

CAD

 

 

 

Employment Change 

82.3K

 

10.0K 

 

-2.8K 

 

 

 

USD

 

 

 

Initial Jobless Claims 

357K

 

355K 

 

363K 

   

 

CAD

 

 

 

Unemployment Rate 

7.2%

 

8.0% 

 

7.4% 

 

 

 

USD

 

 

 

Continuing Jobless Claims 

3338K

 

3350K 

 

3354K 

   

 

CAD

 

 

 

Ivey PMI 

63.5

 

66.0 

 

66.5 

 

 

 

GBP

 

 

 

NIESR GDP Estimate 

0.1%

 

 

 

0.1% 

   

 

 

Economic Events scheduled for April 6, 2012 that affect the European and American Markets

13:30     USD      Average Hourly Earnings (MoM)

13:30     USD      Private Nonfarm Payrolls

Average Hourly Earnings measures the change in the price businesses pay for labor, not including the agricultural sector.  Private Nonfarm Payrolls measures the change in the number of total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals and farm employees.                                   

13:30     USD      Nonfarm Payrolls

13:30     USD      Unemployment Rate

Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity. The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.                                                                                                           

Government Bond Auctions

None scheduled until after April 10, 2012 due to holiday schedule

 

In The Eyes of the Experts – 5/4/2012

What is this report?

In the morning the experts meet in the dealing room in order to prepare themselves for another trading day. They read the business press, and note relevant economic announcements expected during the day. They also consider the support and resistance lines and discuss the important rates in the major pairs; they indicate which pairs may strengthen and those which could weaken. Afterwards they wish everyone a successfully day of trading and turn on the computer screens…

Below you can find pairs the experts assume may be strengthen and weaken during the trading day; support and resistance lines relevant to the day’s trading and critical time for trading each day (important news etc.).

Currencies to watch for Long:

  • JPY
  • USD

 

Currencies watch for Short:

  • GBP
  • EUR
  • CHF

 

Today’s important times (GMT+2):

  • 14:00 GBP
  • 15:30 USD
  • 15:30, 17:00 CAD

 

Important rates:

Pair R2 R1 Pivot S1 S2
EURUSD 1.3034    1.3088 1.3160 1.3214 1.3286
GBPUSD    1.5803 1.5852    1.5880 1.5929 1.5957
USDJPY 81.63 82.03 82.47 82.87 83.31
USDCHF 0.9062 0.9108 0.9145    0.9190 0.9227
USDCAD 0.9882 0.9922 0.9947 0.9987    1.0010
AUDUSD 1.0209 1.0243 1.0276 1.0311 1.0344   

USD/CAD Forecast April 5, 2012, Technical Analysis

The USD/CAD pair rose during the session on Wednesday as the oil markets fell. The oil markets have been slamming this pair around over time, and this should continue to be the case. The pair has also been heavily influenced by the parity level, as that area has held prices lower for some time now.

The 200 day EMA is just above it, and now it looks as if the trend traders could be entering the fray as sellers as well. The current attitude of the market is sideways, and this is common with the USD/CAD pair. With this in mind, we are selling at the parity level, and covering our shorts 75 pips lower. 

USD/CAD Forecast April 5, 2012, Technical Analysis
USD/CAD Forecast April 5, 2012, Technical Analysis

USD/CAD Fundamental Analysis April 5, 2012, Forecast

Analysis and Recommendations:

REMEMBER, MOST GLOBAL MARKETS ARE CLOSED ON FRIDAY APRIL 6, 2012 AND MANY ARE CLOSED ON MONDAY APRIL 9, 2012 ALSO. VOLUME WILL BE LIGHT AND TRADERS WILL BE POSITIONING THEMSELVES FOR THE LONG HOLIDAY WEEKEND. ECONOMIC REPORTS WILL CONTINUE TO BE RELEASED ON FRIDAY, IN THE US THE NON FARMS PAYROLL REPORTS WILL BE ISSUED ON FRIDAY

The USD/CAD is trading at 0.9951 as the greenback gathered strength from the FOMC minutes. There has been little in the way of support for the CAD until Thursday with slew  of economic data is scheduled to be released.

The USD was further supported a labor market report showing improvement at a moderate pace, with private payrolls in March notching more than two years of gains, according to a monthly report released Wednesday by payrolls-processor Automatic Data Processing Inc.

Despite the moderate pace of the recovery, there were many reasons to be optimistic about the outlook, Treasury Secretary Timothy Geithner said Wednesday. In a speech to The Economic Club of Chicago, Geithner said that the economy was “making a lot of progress” working down excess debt. Household debt is down 17 percentage points relative to income since before the crisis, Geithner said. At the same time, financial sector leverage is down “substantially” and credit is expanding, he said. The challenge facing the American economy is not primarily about the health of the business community.

The number of mortgage applications filed in the U.S. last week rose 4.8% from the prior week, the Mortgage Bankers Association said Wednesday, as re-financings picked up following six straight weeks of declines

Economic Events April 4, 2012 actual v. forecast

     

AUD

 

 

 

Trade Balance 

-0.48B

 

1.00B 

 

-0.97B 

 

 

 

 

 

GBP

 

 

 

Halifax House Price Index (MoM) 

2.2%

 

-0.3% 

 

-0.4% 

   

 

 

 

GBP

 

 

 

Services PMI 

55.3

 

53.5 

 

53.8 

 

 

 

 

 

EUR

 

 

 

Retail Sales (MoM) 

-0.1%

 

0.1% 

 

1.1% 

   

 

 

 

EUR

 

 

 

German Factory Orders (MoM) 

0.3%

 

1.2% 

 

-1.8% 

   

 

 

 

PLN

 

 

 

Polish Interest Rate Decision 

4.50%

 

4.50% 

 

4.50% 

 

 

 

 

 

EUR

 

 

 

Interest Rate Decision 

1.00%

 

1.00% 

 

1.00% 

 

 

 

 

 

USD

 

 

 

Treasury Secretary Geithner Speaks 

 

 

 

 

 

 

 

 

 

 

RUB

 

 

 

Russian CPI (MoM) 

0.6%

 

0.5% 

 

0.4% 

 

 

 

 

 

USD

 

 

 

ADP Nonfarm Employment Change 

209K

 

200K 

 

230K 

   

 

 

 

EUR

 

 

 

ECB Press Conference 

 

 

 

 

 

 

 

 

 

 

USD

 

 

 

ISM Non-Manufacturing Index 

56.0

 

57.0 

 

57.3 

   

 

Economic Events scheduled for April 5, 2012 that affect the Canadian Dollar

13:30     CAD      Building Permits (MoM)                              3.0%      -12.3%

Building Permits measures the change in the number of new building permits issued by the government. Building permits are a key indicator of demand in the housing market.

13:30     CAD      Employment Change                                      10.0K      -2.8K

Employment Change measures the change in the number of people employed. Job creation is an important indicator of consumer spending.

13:30     CAD      Unemployment Rate                                      8.0%      7.4%

The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.

13:30     USD      Initial Jobless Claims                                     355K       359K                    

13:30     USD      Continuing Jobless Claims                         3350K     3340K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance. Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

15:00     CAD      Ivey PMI                                                           66.0        66.5

The Ivey Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in Canada. A reading above 50 indicates expansion; a reading below 50 indicates contraction. The index is a joint project of the Purchasing Management Association of Canada and the Richard Ivey School of Business. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.