USD/CAD Forecast August 22, 2012, Technical Analysis

The USD/CAD pair fell below the recent lows on Tuesday, but bounced in order to form a hammer just below the 0.99 level. This pair does look like it’s ready for a bounce of sorts, and we think that a run back to parity is very possible. On a break of the highs from the Tuesday hammer we are willing to start going long for a short-term trade against the Canadian dollar.

Obviously, the oil markets will have to be watched but they seem to be a bit consolidative at the current position. Because of this, we think that perhaps a little bit of profit taking could be found in this market, and it could give us about 100 pips to the upside. On a break of the bottom of the hammer, we think the 0.97 is a given at that point.

USD/CAD Forecast August 22, 2012, Technical Analysis
USD/CAD Forecast August 22, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 22, 2012, Forecast

Analysis and Recommendations:

The USD/CAD dipped to trade in the early part of the US session at 0.9861 Wholesale trade tumbled printing at -0.1% when expectations were for 0.4% although the report will ignored by markets today, but it takes us one step closer toward a GDP add-up for the month of June.  At about 6% of monthly GDP on an income basis, wholesale trade holds little by way of a swing factor for GDP expectations and the sales figures we get today don’t necessarily line up with value added GDP concepts.  This is the second last piece of the June GDP add-up as we await the final piece in tomorrow’s retail sales report.

For CAD, the ability of central banks to reduce tail risk, thereby pushing vol to extreme lows and supporting risk assets has been an important theme. The other major CAD supportive themes are its Triple A sovereign status, improving US data and a hawkish central bank.

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 August 22, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 21

 

AUD

 

 

 

Monetary Policy Meeting Minutes 

 

 

 

 

 

 

 

 

 

NZD

 

 

 

Inflation Expectations (QoQ) 

2.3%

 

 

 

2.4% 

 

 

 

 

HKD

 

 

 

Hong Kong CPI (YoY) 

1.60%

 

3.40% 

 

3.70% 

 

 

 

 

GBP

 

 

 

CBI Industrial Trends Orders 

-21

 

-8 

 

-6 

 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

-0.1%

 

0.4% 

 

0.9% 

   

  

Upcoming Economic Events that affect the CAD and USD

Date

Time

 

 Event

Forecast

Previous

Aug 22

8:30am

CAD

Core Retail Sales m/m

0.4%

0.5%

 

8:30am

CAD

Retail Sales m/m

0.2%

0.3%

 

10:00am

USD

Existing Home Sales

4.52M

4.37M

 

11:00am

CAD

FOMC Meeting Minutes

   
 

2:00pm

USD

Unemployment Claims

   
 

8:30am

USD

Flash Manufacturing PMI

365K

366K

Aug 23

9:00am

USD

New Home Sales

51.3

51.4

 

10:00am

USD

Core Retail Sales m/m

362K

350K

 

8:30am

USD

Core Durable Goods Orders m/m

0.5%

-1.4%

Aug 24

8:30am

USD

Durable Goods Orders m/m

2.8%

1.3%

           

 

Government Bond Auctions

Date  Time  Country 

21/8  10:30  Spain

21/8  12:00  EFSF 

22/8  11:30  Germany 

22/8  11:10  Sweden 

23/8  05:45  Japan 

23/8  11:30  UK 

23/8  19:00  US 

27/8  11:30  Germany 

28/8  10:30  Spain

28/8  11:00  Italy 

28/8  19:00  US 

29/8  11:00  Italy 

29/8  19:00  US 

30/8  05:35  Japan

30/8  11:00  Italy 

30/8  19:00  US

USD/CAD Forecast August 21, 2012, Technical Analysis

The USD/CAD pair did very little during the Monday session as we formed a decidedly neutral candle. The market is being supported just under the 0.99 level, and it looks like we are going to tread water for the short term.

We mentioned previously that we thought there was quite a bit of support below going all the way to the 0.97 level, and the market action over the last several days really hasn’t done much to change that opinion. Because of this, we think that rallies could be sold if you are patient enough. However, the 0.97 level should be supportive and we will have to pay special attention at that point. If we get some type of support at that level, we would be willing to turn around and buying this market. However, you have to keep in mind that the trend is down and therefore respected.

Naturally, the oil markets will have to be observed as well if you’re going to trade this pair. It should be noted that the light sweet crude market did form a hammer just above the $95 level in order to look very supportive at the end of the Monday trading session. This suggests to us that this market should fall over the next several days, but it should be noted that we are definitely on top of a lot of noise right now.

Because of this, it might be difficult to trade this pair if you do not have the stomach for volatility. This is going to be more of a grind lower, so if you are someone who needs momentum to feel comfortable trading, this will not be the pair for you. There is however an argument to be made for gold as well, which is a minor influence on the Canadian dollar. As gold looks set to breakout, this should weaken the US dollar and strengthen the Canadian dollar overall. Because of this, we think that although this market looks a bit extended at this point in time, it will eventually fall again. We are selling rallies, and breaks lower.

USD/CAD Forecast August 21, 2012, Technical Analysis
USD/CAD Forecast August 21, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 21, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading at 1.0446 as the stronger USD adds a few pips on the back of Friday’s consumer confidence release which gave momentum to the greenback. There has been data in Canada or the US and little news flow to affect this pair. Not until the 22nd does the market heat up in Canada with Retail Sales and US home sales.

Unfortunately there just isn’t much to print about this pair.

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 August 20, 2012 actual v. forecast

A very lite day

Aug. 16 

 

NZD

 

 

PPI Input (QoQ) 

0.6%

 

-0.2% 

 

0.3% 

 

 

Aug. 17

 

USD

 

 

Michigan Consumer Sentiment 

73.6

 

72.4 

 

72.3 

 

 

Aug. 20

   

GBP

 

 

 

Rightmove House Price Index (MoM) 

-2.4%

 

 

 

-1.7% 

 

                                 

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event 

Previous

Aug 22

12:30

CAD

Core Retail Sales m/m

0.5%

 

12:30

CAD

Retail Sales m/m

0.3%

 

14:00

USD

Existing Home Sales

4.37M

 

14:30

USD

Crude Oil Inventories

-3.7M

 

18:00

USD

FOMC Meeting Minutes

 

Aug 23

12:30

USD

Unemployment Claims

366K

 

13:00

USD

Flash Manufacturing PMI

51.4

 

14:00

USD

New Home Sales

350K

 

Rumors of ECB Bond Cap Program Dominate Markets

The Foreign Exchange is acting a bit strange this Monday. With little eco data and even less news flow with commodity currencies like the Aussiekiwi and Looney leading the gainers while crosses like the GBP the JPY, and the EUR are little changed. 

Spanish spreads are in flux today, because Spain is perceived to be closer to making a formal request for aid to which the strings attached to granting aid may induce the ECB into buying its bonds. 

European equities are slightly higher across most major European indices while Dow futures are largely flat.

What explains the back and forth motion in markets this morning is volatility that is being induced by ECB speculation.  It started with a story in the German news magazine Der Spiegel that appeared over the weekend and that cited unnamed sources who indicated that the ECB may be moving toward implementing yield caps at its September 6th meeting.  Specifically, Der Spiegel reported that “the ECB is considering establishing in its future bond purchases interest rate levels for each country.

Thus, it would buy sovereign debt of the crisis countries whenever interest rates exceed a certain spread to German Bunds… At its next meeting in early September, the Governing Council will decide whether the interest rate target is actually installed.”  This would entail unlimited bond purchases.  I don’t buy it on the surface of the claims, albeit that commenting on vague rumors is always difficult.  Yield caps through unlimited purchases would fly in the face of ECB President Mario Draghi’s assertions to date that ECB purchases would be targeted only to those countries that submitted formal aid requests to the EC and accepted the concomitant reforms. 

It would also almost assuredly draw criticism from Germany and indeed the salvos are flying quicker by the week on a deepening rift between the ECB and Bundesbank.  The Bundesbank noted today that “The Bundesbank holds to the opinion that government bond purchases by the Euro system are to be seen critically and entail significant stability risks.” 

The risk-on rally was short-circuited by the European mid-day as the ECB came out and commented that bond yield targets have not been discussed by the ECB council.  That in itself isn’t shocking because that would likely only occur by the ECB meeting on September 6th.

The idea has been floating around for several weeks and is likely a strategy that is being considered. Details of the program are undefined, however with spreads over German bunds still elevated (Italy +4.128%, Spain +4.543% and Portugal +7.736%) the potential scope of the program is notably large. The threat of moral hazard, whereby a sovereign would be less stringent with austerity and spending as the consequence of rising bond yields would ultimately be capped, is partially reduced as the ECB has already committed that it will not buy sovereign debt until the target country had agreed to the discipline of an aid program and associated MoU (memorandum of understanding). However, unlimited QE would ultimately share the burden of the European debt crisis among EMU members and be a step closer to fiscal ties.

The ECB has not commented on the possibility, nor denied it. Speculation over an ECB yield spread capping program was initially greeted with a small rally in the EUR. However, the Bundesbanks monthly report warned against an ECB-led bond buying program, stating that “enlarging the commoditization of solvency risks” is the responsibility of fiscal policymakers and should not be taken via central bank balance sheets, which put downward pressure on the currency. The euro returned to its prior trading channel and eventually slid to the bottom of the channel trading at 1.2308 down 0.036 in late afternoon trading.

USD/CAD Forecast August 20, 2012, Technical Analysis

The USD/CAD pair rose during the Friday session as the 0.9850 level acted as support. The result of this was the printing of a hammer for the weekly candle, and it does look like we are going to make some attempt at a rally at this point. This would make sense, as the market has been oversold for quite some time now.

The oil markets do look healthy though, so we suspect that any rally in this pair will be a rally that should be faded. Because of this, we are not willing to buy this bounce, but rather would see some type of weak daily candle in order to sell from. We suspect that the parity level will offer quite a bit of resistance on the bounce back up.

USD/CAD Forecast August 20, 2012, Technical Analysis
USD/CAD Forecast August 20, 2012, Technical Analysis

USD/CAD Forecast for the Week of August 20, 2012, Technical Analysis

The USD/CAD pair fell during most of the week over the previous five sessions, but he did manage to bounce on Friday that formed a hammer. This is very interesting as it appears roughly around the 0.99 level; an area that we suggested could be support.

Obviously, if you’ve been trading Forex for any length of time you know that the oil markets have a great influence on the Canadian dollar’s value. It appears that the oil markets are about to break down, which is interesting that on Friday he had a move higher in the oil markets while the Canadian dollar actually lost value. This is a strange divergence, and before it’s all said and done these two markets normally return to the normal relationship and relative short order.

So the real question is going to be whether or not it is oil that has to fall in order to justify this chart, or that this chart needs to fall in order to justify the oil chart. Nonetheless, we think that this area could provide a little bit of a bounce as this market has essentially been range bound between that the 0.98 and 1.04 for several months going back to the end of last summer.

If you were to take a long position based upon a break of the top of this previous weeks hammer, you would of course have to be very patient as the marketplace will be choppy. There was talk about the Obama administration releasing the strategic petroleum reserve in the near term that hit the wires during the Friday session, but it’s hard to believe that the oil markets would react with anything more than a passing interest in what essentially would be about a week’s worth of oil flooded into the market.

We still prefer to sell this market, but perhaps it is time for a little bit of a bounce. This would make sense as it has been sold so relentlessly over the last couple of months. We prefer to sell rallies, and think we will actually get our opportunity in the near term based upon some weak daily candles.

USD/CAD Forecast for the Week of August 20, 2012, Technical Analysis
USD/CAD Forecast for the Week of August 20, 2012, Technical Analysis

USD/CAD Weekly Fundamental Analysis August 20-24, 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%. 

Weekly Analysis and Recommendation:

The USD/CAD ended the week up at 1.0107 as the US dollar gained on positive eco data. Overall it was a quiet week both in the US and Canada, with a continuing round of disappointing eco data out of Canada. CPI reported well under forecast where traders were expecting a higher than forecast print. In the US, a round of positive data helped give the US dollar some strength and on lower predictions of monetary stimulus the greenback added towards the end of the week.

Date

Last

Open

High

Low

Change %

Aug 17, 2012

1.0107

1.0135

1.0137

1.0103

-0.28%

Aug 16, 2012

1.0135

1.0107

1.0142

1.0102

0.28%

Aug 15, 2012

1.0107

1.0079

1.0114

1.0066

0.28%

Aug 14, 2012

1.0079

1.0072

1.0093

1.0060

0.07%

Aug 13, 2012

1.0072

1.0084

1.0095

1.0061

-0.12%

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.

Major Economic Events for the week of August 13-17, 2012 actual v. forecast for the Canadian & US Dollar

Date

Time

Currency

Event 

Actual

Forecast

Previous

Aug 14

12:30

USD

Core Retail Sales m/m

0.8%

0.4%

-0.8%

 

12:30

USD

PPI m/m

0.3%

0.3%

0.1%

 

12:30

USD

Retail Sales m/m

0.8%

0.3%

-0.7%

Aug 15

12:30

USD

Core CPI m/m

0.1%

0.2%

0.2%

Aug 16

12:30

USD

Building Permits

0.81M

0.77M

0.76M

 

12:30

USD

Unemployment Claims

366K

365K

364K

 

14:00

USD

Philly Fed Manufacturing Index

-7.1

-4.7

-12.9

Aug 17

12:30

CAD

Core CPI m/m

-0.1%

0.2%

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

73.6

72.5

72.3

 Historical: From 2010 to present

Highest: 1.0853 CAD on May 25, 2010.

Average: 1.0090 CAD over this period.

Lowest: 0.9407  CAD on Jan 26, 2011.

 

Economic Highlights of the coming week that affect the Canadian and American Markets

Date

Time

Currency

Event 

Previous

Aug 21

12:30

CAD

Wholesale Sales m/m

0.9%

Aug 22

12:30

CAD

Core Retail Sales m/m

0.5%

 

12:30

CAD

Retail Sales m/m

0.3%

 

14:00

USD

Existing Home Sales

4.37M

 

14:30

USD

Crude Oil Inventories

-3.7M

 

18:00

USD

FOMC Meeting Minutes

 

Aug 23

12:30

USD

Unemployment Claims

366K

 

13:00

USD

Flash Manufacturing PMI

51.4

 

14:00

USD

New Home Sales

350K

Aug 24

12:30

USD

Core Durable Goods Orders m/m

-1.1%

 

12:30

USD

Durable Goods Orders m/m

1.6%

 

USD/CAD Fundamental Analysis August 20, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading at 0.9896 as the USD gained 0.0030 in the morning session. Canadian CPI disappointed markets today, but had little effect on the currency. The US data surprised traders with Michigan Consumer Sentiment coming in better the forecast, helping to give the US a boost before the weekend.

There is little action in the markets and light trading. This coming week will bring us some eco data from Canada which might paint a better picture, but even next week markets are not expecting much action.

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 August 17, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

EUR

 

 

 

German PPI (MoM) 

0.0%

 

0.4% 

 

-0.4% 

 

 

EUR

 

 

 

German PPI (YoY) 

0.9%

 

1.3% 

 

1.6% 

 

 

EUR

 

 

 

Current Account 

12.7B

 

11.1B 

 

10.3B 

 

 

EUR

 

 

 

Trade Balance 

10.5B

 

5.4B 

 

6.8B 

 

 

CAD

 

 

 

Core CPI (MoM) 

-0.1%

 

0.2% 

 

-0.4% 

 

 

CAD

 

 

 

CPI (MoM) 

-0.1%

 

0.2% 

 

-0.4% 

 

 

CAD

 

 

 

CPI (YoY) 

1.3%

 

2.0% 

 

1.5% 

 

 

USD

 

 

 

Michigan Consumer Sentiment 

73.6

 

72.4 

 

72.3 

 

 

USD

 

 

 

Michigan Inflation Expectations 

3.6%

 

 

 

3.0% 

 

 

 

 

 

 

 

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event 

Previous

Aug 21

12:30

CAD

Wholesale Sales m/m

0.9%

Aug 22

12:30

CAD

Core Retail Sales m/m

0.5%

 

12:30

CAD

Retail Sales m/m

0.3%

 

14:00

USD

Existing Home Sales

4.37M

 

14:30

USD

Crude Oil Inventories

-3.7M

 

18:00

USD

FOMC Meeting Minutes

 

 

USD/CAD Forecast August 17, 2012, Technical Analysis

The USD/CAD pair fell during the session on Thursday again, to break down well below the 0.99 handle. This market looks extremely bearish, but it should be noted that is moving in relatively slow motion. Because of this, you have to be very patient in order to short this market.

As for buying this market, that is an even a thought at this point in time. It does look in fact that we are heading towards the 0.97 level, and as such we think that’s either you are short already or are late for the party. If that’s the case, we are going to pay attention to 0.97 and see if the supportive action there is enough to compel us to buy this market. If not, we think this opens the door to 0.95 in short order.

 

USD/CAD Forecast August 17, 2012, Technical Analysis
USD/CAD Forecast August 17, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 17, 2012, Forecast

Analysis and Recommendations:

The USD/CAD declined trading at 0.9876 as the USD lost momentum after a rash of negative eco data ranging from housing starts to unemployment, to manufacturing.

CAD is strong, having gained 0.1% since yesterday’s close. It is noteworthy that as US yields have risen, CAD has rallied. This has been on the back of strengthening US data and falling volatility, which has supported the risk trade and increased expectations for BoC interest rate hikes. The OIS market is now pricing in 28% probability of an interest rate hike in Canada over the next 9‐months

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 August 16, 2012 actual v. forecast

Date

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

 

 

Aug. 16

 

KRW

 

 

 

South Korean Unemployment Rate 

3.1%

 

3.3% 

 

3.2% 

 

 

 

 

GBP

 

 

 

Retail Sales (MoM) 

0.3%

 

-0.1% 

 

0.8% 

   

 

 

GBP

 

 

 

Retail Sales (YoY) 

2.8%

 

1.4% 

 

2.6% 

   

 

 

EUR

 

 

 

CPI (YoY) 

2.4%

 

2.4% 

 

2.4% 

 

 

 

 

EUR

 

 

 

Core CPI (YoY) 

1.7%

 

1.9% 

 

1.6% 

 

 

 

 

USD

 

 

 

Building Permits 

0.812M

 

0.770M 

 

0.760M 

 

 

 

 

CAD

 

 

 

Foreign Securities Purchases 

-7.89B

 

10.67B 

 

26.11B 

 

 

 

 

USD

 

 

 

Housing Starts 

0.746M

 

0.757M 

 

0.754M 

   

 

 

CAD

 

 

 

Manufacturing Sales (MoM) 

-0.40%

 

0.40% 

 

-0.40% 

 

 

 

 

USD

 

 

 

Initial Jobless Claims 

366K

 

365K 

 

364K 

   

 

 

USD

 

 

 

Continuing Jobless Claims 

3305K

 

3300K 

 

3336K 

   

 

 

USD

 

 

 

Philadelphia Fed Manufacturing Index 

-7.1

 

-5.0 

 

-12.9 

 

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event

Forecast

Previous

Aug 17

12:30

CAD

Core CPI m/m

0.2%

-0.4%

 

12:30

CAD

CPI m/m

0.2%

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

72.5

72.3

 

USD/CAD Forecast August 16, 2012, Technical Analysis

The USD/CAD pair fell during the session on Wednesday in order to finally break down below the 0.99 level. This area had acted as support over the last week, but now has given way and it looks as if this pair is going to continue to grind lower until the 0.97 level where it will meet up with serious support.

We think that this pair is one that is worth selling at present levels, but are cognizant of the fact that the 0.97 could act as massive support. Because of this, we are basically aiming for that handle. If that level does give way however, this would open the door to 0.95 in a flash. As for buying this pair, this is simply no argument to be made for it.

USD/CAD Forecast August 16, 2012, Technical Analysis
USD/CAD Forecast August 16, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 16, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading at 0.9904 down a bit in today’s session. The USDCAD has moved beyond where both oil prices and bond yields spreads would suggest. This has been in part due to a drop in overall market volatility as well as CAD positive flows. However with a string of disappointing domestic economic releases and expectations for QE3 declining, the risk is a temporary move higher in USDCAD.

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 August 15, 2012 actual v. forecast

 

 

Currency

 

 

 

Event 

actual

 

forecast

 

previous

   

Aug. 15

 

AUD

 

 

 

Westpac Consumer Sentiment 

-2.50%

 

 

 

3.70% 

 

 

 

 

AUD

 

 

 

Wage Price Index (QoQ) 

1.0%

 

0.8% 

 

0.9% 

 

 

 

 

TRY

 

 

 

Turkish Quarterly Unemployment Rate 

8.20%

 

8.90% 

 

9.00% 

 

 

 

 

GBP

 

 

 

Average Earnings Index +Bonus 

1.6%

 

1.8% 

 

1.5% 

 

 

 

 

GBP

 

 

 

Claimant Count Change 

-5.9K

 

6.0K 

 

1.0K 

   

 

 

GBP

 

 

 

MPC Meeting Minutes 

 

 

 

 

 

 

 

 

 

USD

 

 

 

Core CPI (MoM) 

0.1%

 

0.2% 

 

0.2% 

 

 

 

 

USD

 

 

 

CPI (MoM) 

0.0%

 

0.2% 

 

0.0% 

 

 

 

 

USD

 

 

 

NY Empire State Manufacturing Index 

-5.8

 

6.5 

 

7.4 

 

 

 

 

USD

 

 

 

CPI (YoY) 

1.4%

 

1.6% 

 

1.7% 

 

 

 

 

USD

 

 

 

Core CPI (YoY) 

2.1%

 

2.2% 

 

2.2% 

 

 

 

 

USD

 

 

 

TIC Net Long-Term Transactions 

9.3B

 

63.0B 

 

55.9B 

   

 

 

USD

 

 

 

Industrial Production (MoM) 

0.6%

 

0.5% 

 

0.1% 

   

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event

Forecast

Previous

Aug 16

12:30

CAD

Foreign Securities Purchases

10.67B

26.11B

 

12:30

CAD

Manufacturing Sales m/m

0.4%

-0.4%

 

12:30

USD

Building Permits

0.77M

0.76M

 

12:30

USD

Unemployment Claims

365K

361K

 

12:30

USD

Housing Starts

0.76M

0.76M

 

14:00

USD

Philly Fed Manufacturing Index

-4.3

-12.9

Aug 17

12:30

CAD

Core CPI m/m

0.2%

-0.4%

 

12:30

CAD

CPI m/m

0.2%

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

72.5

72.3

Government Bond Auctions

Date  Time  Country 

Aug 16  09:30  UK

Aug 16  15:00  US 

USD/CAD Forecast August 15, 2012, Technical Analysis

The USD/CAD pair fell slightly during the session on Tuesday, but still remains above the 0.99 support level. The pair is obviously in a bearish trend, but we think that the move lower will be dependent on the oil markets, which are struggling with the $95 level and the light sweet crude variety.

If the oil markets can break above that level, we should see this pair break down. However, we have been overextended to the downside recently and a slight pause and rest makes sense. It is because of this that we are relatively benign on this pair, and are not in this market presently. On a daily close below the 0.99 level, we could consider shorting but the truth is there will be much easier trades out there.

USD/CAD Forecast August 15, 2012, Technical Analysis
USD/CAD Forecast August 15, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 15, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading at 0.9919 drifting down 0.0007 in early US trading. There are no eco data or releases scheduled in Canada and oil prices are fairly stable.

The Looney will be responsive to moves in the USD.

Early on Wednesday, the US released several eco reports and all printed above forecast, see chart below, including retail sales which surprised markets and supported the USD.

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 August 14, 2012 actual v. forecast

Date

Time

 

Currency

 

 

 

Event

Actual

 

Forecast

 

Previous

Aug. 14

00:01

 

GBP

 

 

 

RICS House Price Balance 

-24%

 

-23% 

 

-22% 

 

00:50

 

JPY

 

 

 

Tertiary Industry Activity Index (MoM) 

0.1%

 

-0.3% 

 

0.9% 

 

02:30

 

AUD

 

 

 

NAB Business Confidence 

4

 

 

 

-3 

 

06:30

 

EUR

 

 

 

French CPI (MoM) 

-0.4%

 

-0.2% 

 

0.0% 

 

06:30

 

EUR

 

 

 

French GDP (QoQ) 

0.0%

 

-0.1% 

 

0.0% 

 

07:00

 

EUR

 

 

 

German GDP (QoQ) 

0.3%

 

0.2% 

 

0.5% 

 

07:00

 

EUR

 

 

 

German GDP (YoY) 

0.5%

 

1.0% 

 

1.7% 

 

07:45

 

EUR

 

 

 

French Non-Farm Payrolls (QoQ) 

-0.1%

 

-0.1% 

 

0.1% 

 

08:15

 

CHF

 

 

 

PPI (MoM) 

-0.3%

 

-0.2% 

 

-0.3% 

 

09:30

 

GBP

 

 

 

Core CPI (YoY) 

2.3%

 

2.1% 

 

2.1% 

 

09:30

 

GBP

 

 

 

CPI (YoY) 

2.6%

 

2.3% 

 

2.4% 

 

09:30

 

GBP

 

 

 

CPI (MoM) 

0.1%

 

-0.1% 

 

-0.4% 

 

10:00

 

EUR

 

 

 

GDP (QoQ) 

-0.2%

 

-0.2% 

 

0.0% 

 

10:00

 

EUR

 

 

 

German ZEW Economic Sentiment 

-25.5

 

-19.3 

 

-19.6 

 

10:00

 

EUR

 

 

 

Industrial Production (MoM) 

-0.6%

 

-0.7% 

 

0.9% 

 

10:00

 

EUR

 

 

 

ZEW Economic Sentiment 

-21.2

 

-19.1 

 

-22.3 

 

13:30

 

USD

 

 

 

Core PPI (MoM) 

0.4%

 

0.2% 

 

0.2% 

 

13:30

 

USD

 

 

 

Core Retail Sales (MoM) 

0.8%

 

0.4% 

 

-0.8% 

 

13:30

 

USD

 

 

 

PPI (MoM) 

0.3%

 

0.2% 

 

0.1% 

 

13:30

 

USD

 

 

 

Retail Sales (MoM) 

0.8%

 

0.3% 

 

-0.7% 

 

13:30

 

USD

 

 

 

PPI (YoY) 

0.5%

 

0.5% 

 

0.7% 

 

13:30

 

USD

 

 

 

Core PPI (YoY) 

2.5%

 

2.3% 

 

2.6%

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event 

Previous

Aug 15

12:30

USD

Core CPI m/m

0.2%

 

12:30

USD

Empire State Manufacturing Index

7.4

 

13:00

USD

TIC Long-Term Purchases

55.0B

 

13:15

USD

Capacity Utilization Rate

78.9%

 

13:15

USD

Industrial Production m/m

0.4%

 

14:30

USD

Crude Oil Inventories

-3.7M

Aug 16

12:30

CAD

Foreign Securities Purchases

26.11B

 

12:30

CAD

Manufacturing Sales m/m

-0.4%

 

12:30

USD

Building Permits

0.76M

 

12:30

USD

Unemployment Claims

361K

 

12:30

USD

Housing Starts

0.76M

 

14:00

USD

Philly Fed Manufacturing Index

-12.9

Aug 17

12:30

CAD

Core CPI m/m

-0.4%

 

12:30

CAD

CPI m/m

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

72.3

Government Bond Auctions

Date  Time  Country 

Aug 15  09:10  Sweden

Aug 16  09:30  UK

Aug 16  15:00  US

USD/CAD Forecast August 14, 2012, Technical Analysis

The USD/CAD pair attempted to rally on Monday, but fell short of anything that would impress us enough to get involved. The Friday shooting star suggested a continuation to the downside, and it does look like any rallies in this market are to be sold at this point in time. We think the pair will fall to the 0.97 level eventually, and at that point there will be a lot of questions asked.

Obviously, you’re going to have to once the oil markets as well, as the Canadian dollar is heavily influence by them. We think that the oil markets look right for some type of rally in the relative near future, and this could be the catalyst that since this pair down to 0.97. If that level gives way, we could see 0.95 and relatively short order. As for buying this pair, we aren’t comfortable doing it anytime soon, and as such aren’t even thinking about it.

USD/CAD Forecast August 14, 2012, Technical Analysis
USD/CAD Forecast August 14, 2012, Technical Analysis

USD/CAD Fundamental Analysis August 14, 2012, Forecast

Analysis and Recommendations:

The USD/CAD is trading at 0.9936 with nothing to report. There are no events, news, auctions or stories coming out of Canada and the US is almost as quiet with the big news being Mitt Romney’s VP selection. Otherwise markets were subdued today. The US dollar bounced around for the day on worries and gossip from traders.

It is expected to be a quiet week for this pair or at least until the end of the week when Canada starts releases some eco reports.

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 August 13, 2012 actual v. forecast

Date

Time

 

Currency

 

Importance

 

Event

Actual

 

Forecast

 

Previous

 

Aug. 13

00:50

 

JPY

 

 

 

GDP (QoQ) 

0.3%

 

0.6% 

 

1.3% 

 

 

09:00

 

NOK

 

 

 

Norwegian Core Retail Sales (MoM) 

-1.40%

 

-1.00% 

 

1.70% 

 

 

Upcoming Economic Events that affect the CAD and USD

Date

Time

Currency

Event 

Previous

Aug 14

12:30

USD

Core Retail Sales m/m

-0.4%

 

12:30

USD

PPI m/m

0.1%

 

12:30

USD

Retail Sales m/m

-0.5%

 

14:00

USD

Business Inventories m/m

0.3%

Aug 15

12:30

USD

Core CPI m/m

0.2%

 

12:30

USD

Empire State Manufacturing Index

7.4

 

13:00

USD

TIC Long-Term Purchases

55.0B

 

13:15

USD

Capacity Utilization Rate

78.9%

 

13:15

USD

Industrial Production m/m

0.4%

 

14:30

USD

Crude Oil Inventories

-3.7M

Aug 16

12:30

CAD

Foreign Securities Purchases

26.11B

 

12:30

CAD

Manufacturing Sales m/m

-0.4%

 

12:30

USD

Building Permits

0.76M

 

12:30

USD

Unemployment Claims

361K

 

12:30

USD

Housing Starts

0.76M

 

14:00

USD

Philly Fed Manufacturing Index

-12.9

Aug 17

12:30

CAD

Core CPI m/m

-0.4%

 

12:30

CAD

CPI m/m

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

72.3

Government Bond Auctions

Date  Time  Country 

Aug 14  09:10  Greece 

Aug 14  09:10  Italy

Aug 14  09:30  Belgium

Aug 14  14:30  UK

Aug 15  09:10  Sweden

Aug 16  09:30  UK

Aug 16  15:00  US 

USD/CAD Forecast August 13, 2012, Technical Analysis

USD/CAD and try to rally during the Friday session, but was slapped back down to form a massive shooting star to sit just above the 0.99 level. This shows extreme bearishness, and just how negative the view on this market has become. However, we see the 0.98 level as the beginning of serious support, and also the bottom of a massive consolidation zone that runs from that level to the 1.04 or even the 1.05 area. With this being said, we think that although the next move is down, it will be somewhat limited. In other words, if you are just thinking of shorting this market now – you are probably too late.

USD/CAD Forecast August 13, 2012, Technical Analysis
USD/CAD Forecast August 13, 2012, Technical Analysis

USD/CAD Forecast for the week of August 13, 2012, Technical Analysis

The USD/CAD pair fell precipitously during the previous week as the bottom of the downtrend channel gave way. The market has finished the week near the 0.99 handle, and it does look like we are going to make an attempt to reach as low as 0.97 or so before we find serious support.

This of course can change rapidly if there is some kind of headline risk in the market that plays out. Remember, this pair will rise based upon fear in the marketplace. At this moment time however, it does seem that the market is anticipating the Federal Reserve going into another round of quantitative easing next month, and this is hurting the dollar against the Canadian dollar as people rush into the oil and gold markets to protect their net worth.

We would however buy supportive candles closer to the 0.97 or even 0.98 handles. We think that the overall market looks very consolidative at this point in time between 0.97 and 1.04. If the 0.9 7 Level Gives Way to the sellers, then we obviously could run down to the 0.94 level as it was the recent all-time lows.

USD/CAD Forecast for the week of August 13, 2012, Technical Analysis
USD/CAD Forecast for the week of August 13, 2012, Technical Analysis

USD/CAD Weekly Fundamental Analysis Aug 13-17, 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%. 

Weekly Analysis and Recommendation:

The USD/CAD tumbled this week to close at 0.9910 as the pair marched right through parity. This pair were out of sync with the rest of the global currencies. The USD picked up momentum towards the end of the week, especially on positive trade balance data, where as the CAD reported well below forecast trade balance and negative housing data. Earlier in the week a surprisingly high IVEY PMI supported the currency. At the end of the week the markets were totally surprised by a very negative jobs release, traders had been expecting the report to come in over forecast.

Date

Last

Open

High

Low

Change %

Aug 10, 2012

0.9910

0.9914

0.9970

0.9906

-0.04%

Aug 09, 2012

0.9914

0.9951

0.9951

0.9910

-0.37%

Aug 08, 2012

0.9951

0.9976

0.9989

0.9937

-0.24%

Aug 07, 2012

0.9975

1.0008

1.0012

0.9963

-0.33%

Aug 06, 2012

1.0008

1.0006

1.0021

0.9984

0.02%

The Canadian dollar seems to be remaining strong on good old sound economics. There are rumors that the SNB is going to be moving some M&A business to Canada, Canada still maintains its AAA credit rating

The combination of weak Chinese exports and a downward revision to the IEA’s oil demand outlook has weighted on CAD, with the currency weakening 0.3% since yesterday’s close. The IEA’s downward revision to oil demand has weighed on oil prices; however for Canada (and CAD) the IEA’s $103 H212 forecast for Brent and its estimate that the spread between Brent and WTI will fall from $14 inQ312 to $9 in late 2013 is still supportive of the economy

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.

Major Economic Events for the week of Aug 6-10 actual v. forecast for the Canadian & US Dollar

Date

Currency

Event 

Actual

Forecast

Previous

Aug 7

CAD

Building Permits m/m

-2.5%

-3.5%

7.1%

 

CAD

Ivey PMI

62.8

52.0

49.0

Aug 8

USD

Prelim Nonfarm Productivity q/q

1.6%

1.5%

-0.9%

 

USD

Prelim Unit Labor Costs q/q

1.7%

0.5%

1.3%

 

USD

Crude Oil Inventories

-3.7M

-0.6M

-6.5M

 

USD

10-y Bond Auction

1.68|2.5

 

1.46|3.6

Aug 9

CAD

Housing Starts

209K

212K

222K

 

CAD

Trade Balance

-1.8B

-0.9B

-1.0B

 

CAD

NHPI m/m

0.2%

0.3%

0.3%

 

USD

Trade Balance

-42.9B

-47.4B

-48.0B

 

USD

Unemployment Claims

361K

371K

367K

 

USD

Mortgage Delinquencies

7.58%

 

7.40%

Aug 10

CAD

Employment Change

-30.4K

9.6K

7.3K

 

CAD

Unemployment Rate

7.3%

7.2%

7.2%

 

USD

Import Prices m/m

-0.6%

0.1%

-2.4%

 

USD

Federal Budget Balance

-69.6B

-103.0B

-59.7B

Historical: From 2010 to present

Highest: 1.0853 CAD on May 25, 2010.

Average: 1.0090 CAD over this period.

Lowest: 0.9407  CAD on Jan 26, 2011.

 

Economic Highlights of the coming week that affect the Canadian and American Markets

Date

Time

Currency

Event 

Previous

Aug 14

12:30

USD

Core Retail Sales m/m

-0.4%

 

12:30

USD

PPI m/m

0.1%

 

12:30

USD

Retail Sales m/m

-0.5%

 

14:00

USD

Business Inventories m/m

0.3%

Aug 15

12:30

USD

Core CPI m/m

0.2%

 

12:30

USD

Empire State Manufacturing Index

7.4

 

13:00

USD

TIC Long-Term Purchases

55.0B

 

13:15

USD

Capacity Utilization Rate

78.9%

 

13:15

USD

Industrial Production m/m

0.4%

 

14:30

USD

Crude Oil Inventories

-3.7M

Aug 16

12:30

CAD

Foreign Securities Purchases

26.11B

 

12:30

CAD

Manufacturing Sales m/m

-0.4%

 

12:30

USD

Building Permits

0.76M

 

12:30

USD

Unemployment Claims

361K

 

12:30

USD

Housing Starts

0.76M

 

14:00

USD

Philly Fed Manufacturing Index

-12.9

Aug 17

12:30

CAD

Core CPI m/m

-0.4%

 

12:30

CAD

CPI m/m

-0.4%

 

13:55

USD

Prelim UoM Consumer Sentiment

72.3