USD/CAD Fundamental Analysis Jan. 26, 2012, Forecast

Economic Events: (GMT)

13:30     USD     Core Durable Goods Orders (MoM)     0.9%     0.3%

13:30     USD     Durable Goods Orders (MoM)     2.0%     3.7%

Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity.

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

 13:30    USD     Initial Jobless Claims     370K     352K

 13:30    USD     ontinuing Jobless Claims     3432K

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.

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

15:00     USD     New Home Sales     320K     315K

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated.

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

Analysis and Recommendations:

The USD/CAD is currently trading 1.0055 falling from the high of 1.0148.

The greenback maintained its strength during morning trading and held on through mid day waiting for the FOMC statements.

While the euro also stayed close to the 1.30 level even though investors were worried and all the news from Brussels and Greece were negative.

The Fed Interest Committee promised to hold low interest rates through 2014, with this said the dollar began to drop around the world. Within minutes the USD was down and gold skyrocketed up over 35.00 breaking the 1700.00 level.

Thus pushing the Canadian dollar up against the USD. This weakness will continue through out the day, the markets and investors are reactionary.

Any word or statements from the EU will throw the markets into high gear.

Upcoming Govt Bond Sales Dates

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Forecast January 25, 2012, Technical Analysis

USD/CAD rose during the session originally as the oil markets fell for the day. However, as time wore on, the pair gave up most of its gains, and the resulting candle is a shooting star at the bottom of a massive descending triangle.

The triangle hasn’t broken one way or the other yet, but the market shows us during the session that the pressure to the downside continues. The breaking of the bottom of this triangle has traders looking for the 0.95 level, and if we get a daily close below the parity level – we are short until we see that level.

The pair has a long history of grinding and then making sudden moves, and it looks as if the pair is trying to wind up for another shot in one direction or another. The pair will tend to follow oil, so the fact that the Canadian dollar looks strong while the oil markets look a bit weak is a bit of a conundrum. However, one can only play the hand dealt, and this chart currently looks like it could give a sell signal at any time. We won’t buy until the top trend line of the triangle gets closed above on the daily chart.

The Canadian dollar will often grind quite a bit because of the close proximity of the two economies, and the fact that Canada sends 80% of its exported goods to the US. If the US is doing well, so is Canada. However, it doesn’t work the same in reverse as Canada isn’t a huge market for the Americans. The flow of money across the borders is however, quite massive.

Although the oil market looks weak, we could see a breakdown in this market simply because the Dollar is weak. The last couple of sessions have been rough on the Greenback, and as a result a sudden drop down to 0.97 isn’t necessarily ruled out. Again, we would buy if we could get the close above the top line of the triangle, but it is looking more and more unlikely that we will see that happen. More than likely, a close below parity has us short of this pair.

USD/CAD Forecast January 25, 2012, Technical Analysis
USD/CAD Forecast January 25, 2012, Technical Analysis

USD/CAD Fundamental Analysis Jan. 25, 2012, Forecast

Economic Events: (GMT)

15:00     USD       Pending Home Sales (MoM)                      -0.5%                     7.3%

The National Association of Realtors (NAR) Pending Home Sales Report measures the change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction.

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

19:15     USD       Interest Rate Decision                                 0.25%                    0.25%

Federal Open Market Committee (FOMC) members vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

A higher than expected rate is positive/bullish for the USD, while a lower than expected rate is negative/bearish for the USD.

 19:15    USD       FOMC Statement

The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) statement is the primary tool the panel uses to communicate with investors about monetary policy. It contains the outcome of the vote on interest rates, discusses the economic outlook and offers clues on the outcome of future votes.

A more dovish than expected statement could be taken as negative/bearish for the USD, while a more hawkish than expected statement could be taken as positive/bullish for the USD.

Analysis and Recommendations:

The USD/CAD is currently trading 1.0096 as the USD picked up steam in afternoon trading. As trouble continued to unfold in the eurozone over the Greek Credit Crisis and negotiations of avoid a disorderly default failed the investors sought the comfort of the USD, pushing the greenback up against its counterparts. In early morning trading the CAD was strong supported by better then expected retail sales reports, pushing the CAD up 1.0142 but as the day continued on, the US dollar would win the dropping to 1.00742.

Wedneday the US has several economic reports due but most important will be the FOMC statements. In truth it is the battle being fought in Brussels and Athens, to find a way to stop Greece from collapsing. Creditors have said they have moved all they can, and they still do not have a deal, and the hopes of any deal to come from prior negotiations failed when the EU Ministers declined the coupon/interest rates to be paid on the swapped bonds.

The markets will respond to news from Europe, more on a reactionary basis then on a sound judgement.

Also as tensions mount with Iran, the price of Crude could push up the Canadian Dollar, keep an eye here as well.

 

Upcoming Govt Bond Sales Dates

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Forecast January 24, 2012, Technical Analysis

USD/CAD fell on Monday as the oil markets got a bit of a boost by the passing of sanctions by the EU on Iranian oil. Of course, this doesn’t really take effect until July 1, but none the less, there was a reaction to this in the oil pits.

The parity to 1.01 levels is pretty strong support, but the area also looks like it could be the bottom of a descending triangle as the downward pressure continues. The oil markets will be key, and to be honest, they look a bit heavy at the moment. The falling of the oil markets would cause a rise in this pair if history is to believe. Because of this, we aren’t ready to quite throw in the towel on USD strength yet – but are aware that the bullish technicals are starting to fall apart currently.

If the parity level is broken by the market, and the price closes below, we could see the triangle give way in order to find 0.95 or so. The triangle measures 500 pips and the breakdown from parity should give us this level. However, the market in this pair tends to be choppy at times, and we may see more of that as headlines continue to worry traders.

The bullish case can still be made, but the bulls need to get it together fairly quick as time is running out. Of course, if the Iranian crisis gets worked out – this could be just the key for that to come about. Also, poor economic numbers can often push this pair higher as well, but it would have to be fairly significant judging by the behavior of the market lately.

The breakdown has us selling, and we would have to simply ignore the day to day fluctuations as we know this pair to be choppy 80% or more of the time. The fall would be with the trend, and while we don’t necessarily feel that it should happen – only broke traders spend much time arguing with the long-term trend. A break above the top of the “triangle” is what it would take to buy, or perhaps a hammer somewhere in this area would work as well.

USD/CAD Forecast January 24, 2012, Technical Analysis
USD/CAD Forecast January 24, 2012, Technical Analysis

USD/CAD Fundamental Analysis Jan. 24, 2012, Forecast

Economic Events: (GMT)

There are no scheduled economic events for the US

13:30     CAD     Core Retail Sales (MoM)     0.2%     0.7%

13:30     CAD     Retail Sales (MoM)     0.3%     1.0%

Core Retail Sales and Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.

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

Analysis and Recommendations:

The USD/CAD is currently trading 1.0088.

The USD dropped today against all of its trading pairs. The greenback fell on news of a potential deal in Greece and positive reports from the EU meetings. The French Minister assured investors that an agreement was forth coming.

As the US dollar fell, commodity prices rose, pushing up Gold and Crude Oil giving strength to the Canadian Dollar.

Crude Oil surges over 1.50 to just under the 100.00 mark as the EU Ministers announced an immediate embargo on Iranian Oil and also froze all assets from the Central Bank of Iran.

As oil goes up so does the Twooie, they are partners in crime. A good deal of the GDP of Canada is based on its oil exports.

Upcoming Govt Bond Sales Dates

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Weekly Fundamental Analysis Jan. 23-27, 2012, Forecast

Economic Events

See daily forecasts for detailed information on each economic event

Jan. 24

13:30 CAD Core Retail Sales (MoM) 0.2% 0.7%

Jan. 25

19:15 USD Interest Rate Decision 0.25% 0.25%

19:15 USD FOMC Statement

Jan. 26

13:30 USD Core Durable Goods Orders (MoM) 0.9% 0.3%

13:30 USD Initial Jobless Claims 370K 352K

15:00 USD New Home Sales 320K 315K

Jan. 27

13:30 USD GDP (QoQ) 3.0% 1.8%

Historical:

Highest: 1.0842 CAD on 01 Nov 2009.

Average: 1.0147 CAD over this period.

Lowest: 0.9435 CAD on 26 Jul 2011.

Rule:

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%.

Trading Ideas 

1) if you believe the price of oil will keep rising, it might be a good strategy to buy the Canadian dollar because it’s 81% positive correlation to oil over the past years.

2) Since the USD/CAD pair tends to be highly correlated to oil, it might be a good idea to compare both Canadian dollar and oil charts in order to predict future moves, if for example oil breaks above an important resistance level and USD/CAD didn’t break resistance level yet, the USD/CAD is very likely to break above also. This illustrates how oil tends to lead the move ahead of USD/CAD.

Analysis and Recommendation:

The USD/CAD was up and down all week, with positive jobs reports and negative housing data, but moved up against all currencies on Friday. Crude Oil dropped towards the end of the week, adding to the weakness of the loonie

The pair ended the week at 1.0132

The entire week seemed to be focused on Greece and the negotiations with the IIF representatives as deadlines approached. There were rumors flying in every direction, moving the markets but at the close of day Friday no deal had been reached and the IIF representatives packed up and went home stating the negotiations would continue over the week by phone.

The pair is expected to continue to the decline in the beginning of the week, there are several economic reports due early that could affect the markets, but the main event is the EU and Greece, news, rumor, truth or fiction, will move the markets.

Keep an eye on Gold, as it surged on Friday as investors moved to safe-havens. This week will be about safety and risk appetite. A continued drop in crude could also reduce

As of this writing, there have been no final agreements on Greece and the EU meetings are scheduled for tomorrow. It looks more and more like a Greece default or intervention by the ECB or the IMF.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Forecast January 23, 2012, Technical Analysis

The USD/CAD pair rose on Friday as the 200 day EMA held as support, along with the bottom of the triangle. The oil markets fell, and this is always bad for the Loonie given enough time. However, later in the day we saw selling of the US dollar in general, and that came to this pair as well.

The close saw a shooting star, and it looks like this pair wants to fall at this point. However, the 1.01 level just below is the start of a massive support zone, so the fall will be a tough one. Because of this, we won’t sell this pair right now until we get below the 0.99 mark. However, buying doesn’t look all that enticing either. We are staying flat in this market.

USD/CAD Forecast January 23, 2012, Technical Analysis
USD/CAD Forecast January 23, 2012, Technical Analysis

USD/CAD Forecast for the Week of January 23, 2012, Technical Analysis

USD/CAD fell during the week as the oil markets went back and forth for the sessions. However, the oil markets did end up lower, and this pair did as well. (Something that is counterintuitive in general.) The 1.01 level is being tested at the close, and we are starting to see a real fight at this point in time.

The daily chart shows a messy triangle at this point, and the bottom of it is being tested. However, the 1.01 level is the start of at least 200 pips worth of support. In general, we don’t like this pair in either direction right now, and will avoid it.

USD/CAD Forecast for the Week of January 23, 2012, Technical Analysis
USD/CAD Forecast for the Week of January 23, 2012, Technical Analysis

USD/CAD Fundamental Analysis Jan. 23, 2012, Forecast

Economic Events: (GMT)

11:30 USD 3-Month Bill Auction

The figures displayed in the calendar represent the rate on the treasury bill auctioned. U.S. Treasury Bills have maturities of a few days to 52 weeks and are sold to institutional and individual investors through public auctions to finance the public debt. The rate on a Treasury bill represents the return an investor will receive by holding the bill its entire duration. All bidders receive the same rate at the highest accepted bid. Yield fluctuations should be monitored closely as an indicator of the government debt situation. Investors compare the average rate at auction to the rate at the previous auction of the same security and to an average of the past 10 to 12 auctions of that security.

08:30 CAD Leading Indicators (MoM)

The Leading Indicators Index is a composite index based on 10 economic indicators, that is designed to predict the future direction of the economy. The report tends to have a limited impact because most of the indicators used in the calculation are released previously.

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

Analysis and Recommendations:

The USD/CAD is currently trading 1.0141  +0.0032   (+0.32%)

The Canadian dollar weakens further after December’s much weaker CPI report. The US dollar is at C$1.0141, having traded briefly above C$1.0160 after the release. Crude Oil is also dropping in today’s trading which will weaken the Canadian Dollar. This might present an opportunity, as the USD seems to be gathering some strenght in afternoon trading.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Forecast Jan. 23, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 23, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 23, 2012, Fundamental Analysis
The USD/CAD pair inclined on Friday as the USD gained strength after The Daily Telegraph’s report said that the IMF will downgrade the global growth outlook for 2012 to 3.3% from 4.0%.

The IMF sees a 2.2 percent contraction for Italy and a 1.7 percent growth decline for Spain, as economies are weighed down by fiscal austerity measures, The IMF also urged the European Central Bank to boost liquidity to stave off a deeper Euro zone crisis.

The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Monday January 23:

Canada will release the Leading indicators for the month of December, as it is expected to show an incline below previous, so fluctuating trading in the pair is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.

USD/CAD Forecast Jan. 23-27, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 23-27, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 23-27, 2012, Fundamental Analysis
The USD/CAD pair rebounded to the downside last week after the upbeat flow of major fundamentals and bond auctions through the week, where the high yielding assets strengthened and gained strength against the low yielding assets specially the U.S. dollar as the sentiment improved in the market and optimism spread wide after the downgrades last week failed to prevent European nations from accessing the capital market successfully.

Moreover, markets gained on the resumed Greek debt-talks as some progress was reached in finalizing a deal with the private sector on the percentage haircut and the coupon rate on the Greek bonds. However, the results are set to be provided by the end of this week. The importance of the talks is driven by the International Monetary Fund and European Union which demanded the nation to finish with the deal in order to become eligible to the offered second bailout package.

Traders will be eyeing the FOMC rate decision later on Wednesday, where the majority of analysts expect the FOMC to leave the current monetary policy unchanged. In addition, the GDP figures for the fourth quarter are expected at a strong 3.0% expansion compared with the prior 1.8%.

Nonetheless, traders will also continue to monitor the developments from the 17-bloc euro nation and the European leader’ latest moves to contain the debt crisis, where we expect volatility to persist through the sessions this week.

Moreover, several euro zone nations are preparing for bond auctions, where all eyes will be focused on the yields and demand on those bonds.

Overall, we preserve our bullish outlook for the USD/CAD pair, since financial markets conditions continue to suggest that demand for lower yielding assets will remain strong, and that should continue to provide the USD/CAD pair with more bullish momentum. However, positive data could keep the pressure on the pair and push it further to the downside.

Highlights for this week that will probably affect the USD/CAD pair’s direction are:

Monday January 23:

No major fundamentals will be released from the U.S. economy.

Auctions:

10:00 GMT Slovakia sells bills

10:15 GMT Germany sells bills

14:00 GMT France to sells bills

Tuesday January 24:

No major fundamentals will be released from the U.S. economy.

Auctions:

09:00 GMT Netherlands sells bills

09:30 GMT Spain sells bills

10:00 GMT Malta sells bills

Wednesday January 25:

The United States Pending Home Sales are due at 15:00 GMT for the month of December and are expected to remain flat after 7.3% rally the previous month.

At 17:30 GMT the market awaits the FOMC rate decision where the Federal Reserve is expected to keep rates near zero at the 0.25-0.0% range while unlikely to take any new stimulus decisions though still the focus will be on any signal for more easing and support for the economy though still unlikely as the Feds buy time with the flow of good data and signs of stabilization.

Auctions:

10:15 GMT Germany sells bills

Thursday January 26:

The United States will start the day at 13:30 GMT with the Durable Goods Orders for December where the index is expected to have eased to 2.0% after 3.8% and excluding transportation expected at 0.9% rising from 0.3%.

Initial jobless claims are due at the same time for the week ending January 21 after they declined last week to 352,000.

Leading Indicators for the month of December will be released at 15:00 GMT and expected to improve to 0.7% after 0.5%.

Also at 15:00 GMT the New Home Sales for December will be released and expected with 1.6% rise to 320 thousand from 315 thousand.

Auctions:

10:00 GMT Italy sells bills

Friday January 27:

The United States will end with top notch data where at 13:30 GMT the advanced GDP estimate for the fourth quarter is expected to show a strong 3.0% expansion following 1.8% growth in the third quarter.

Core PCE is expected to slow to 0.9% after 2.1% while Personal Consumption expected with a leap to 2.5% after 1.7%.

The week’s data will end at 14:55 GMT with the University of Michigan Confidence for January which is expected unrevised from the advanced estimate at 74.0.

Auctions:

10:00 GMT Italy sells bills

USD/CAD Forecast January 20, 2012, Technical Analysis

USD/CAD fell on Thursday, and even managed to poke through the bottom of the massive symmetrical triangle that we have been watching lately. The breech of the uptrend line was significant, but even more important was the fact that the price managed to bounce back above it to form a hammer on the day.

The 1.01 level is massive support going all the way down to the 0.99 level, and as such we stated that we would be very leery of any breakdown under this triangle. By the end of the day, we have seen quite a rally to end up fairly unchanged. This shows that the support is holding, and that it will be massive in scope.

The oil markets had a bit of a back and forth day, and ended up lower – spurring selling of the Canadian dollar. The oil markets will be key going forward, but the Iranian situation with the Gulf of Hormuz could be a major factor in this pair. The Dollar of course will continue to get a boost in times of uncertainty, and there is plenty of that to go around at the moment as you undoubtedly have noticed.

The buying of this pair is probably the trade, but we need to see the market break above the top of the Thursday range as it shows a complete rout of the bears in this pair. The move could be explosive, but we are more willing to bet that the return upwards will only be more consolidation in the triangle. However, we often see these false breakdowns before a big move up. With this in mind, we would be willing to buy that position, but take half off the table as we get towards the top of the triangle. If we break through – then good….we already have half of a position gaining traction.

As far as selling, we aren’t as enthused because of the Dollar being the safety trade, and the fact that the support looks so healthy. However, if the 0.99 level gives way on a daily close, we would have to throw in the towel and go short.

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

USD/CAD Fundamental Analysis Jan. 20, 2012, Forecast

Economic Events: (GMT)

12:00 CAD Core CPI (MoM) -0.30% 0.10%

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

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

12:00 CAD CPI (MoM) -0.10% 0.10%

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.

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

13:30 CAD Wholesale Sales (MoM) 1.00% 0.90%   

Wholesale Sales measures the change in the total value of sales at the wholesale level. It is a leading indicator of consumer spending.

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

15:00 USD Existing Home Sales 4.65M 4.42M

Existing Home Sales measures the change in the annualized number of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength.

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

 Analysis and Recommendations:

The USD/CAD is currently trading at 1.0116 after opening at 1.0112 and has stayed range bound all day.

Data in from the US showed jobless claims dropped to the lowest level in almost four years, while consumer prices remained flat for a 2nd month. Housing starts data came in weaker than expected showing that the construction sector – despite some improved confidence – still has a way to go to. Even though, market reports were saying there would be an increase in housing starts, until the foreclosure glut is absorbed housing starts will remain low.

Other positive signs for the US labor market was the drop in jobless claims falling by a larger than expected figure falling to 352K, the lowest since 2008. This follows a sharp increase in claims the previous week to above the 400K level.

On the other hand, the Canadian dollar is benefiting from the increase in crude oil prices.

There are many factors at play in Europe today, there are rumors on the Greek Negotiations. There is the positive news on the French and Spanish Bond sales and the IMF discussion on increasing their funding and ongoing discussions with Greece to offer aid.

Combined with UK job rate surge… it is difficult to make heads or tails where the CAD will shake out in all of this. There are several economic reports due on Friday, these might give a boost to the CAD, but it is most likely that the loonie will remain in a tight concentration throughout the weekend.

Upcoming Govt Bond Sales Dates

Jan 23  10:10  Norway  Nok 6.0bn 4.25% May 2017 bond

Jan 23  10:10  Slovakia  Auctions Apr 2014 bond

Jan 23  10:30  Germany  Eur 3.0bn Jan 2013 Bubill

Jan 23  12:00  Norway  Details bond auction on Jan 30

Jan 24  09:30  Netherlands Eur 1.5-2.5bn Jan 2013 & Jan 2042 DSL

Jan 24  09:30  Spain  Auctions 3 & 6M T-bills

Jan 24  16:30  Italy   Details CTZ/BTPei on Jan 26 & BOT on Jan 27 &

Jan 24  18:00  US  Auctions 2Y Notes

Jan 25  10:10  Sweden  Nominal bond auction

Jan 25  10:30  Germany  Eur 3.0bn 3.25% Jul 2042 Bund

Jan 25  16:30  Italy   Details BTP/CCTeu on Jan 30

Jan 25  18:00  US  Auctions 5Y Notes

Jan 26  10:10  Italy   Auctions CTZ/BTPei

Jan 26  18:00  US  Auctions 7Y Notes

Jan 27  10:10  Italy   BOT auction

USD/CAD Forecast Jan. 20, 2012, Fundamental Analysis

The USD/CAD pair dropped on Thursday as the USD lost strength after the upbeat jobless claims, as the number of Americans filing for unemployment insurances dropped by 50 thousand to 352 thousand last week, from a revised 402 thousand, the lowest in almost four year and beating analysts’ median estimates of 384 thousand. In essence, markets were filled with optimism after the Spanish and French auction went pretty well.

The sentiment improved in the market today after the Spanish and French bond auctions, as Spain sold 3.009 billion Euros of 5.85% 2022 bonds, on an average yield of 5.403%, compared with the previous of 6.975% recorded in the November auction. Demand for these bonds was 2.17 times the quantity offered compared with 1.54 times an auction earlier.

The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Friday January 20:

Canada won’t release any new data, so volatile trading is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.

USD/CAD Forecast January 19, 2012, Technical Analysis

USD/CAD fell for the Wednesday session as the Dollar got hit around the world. The “risk on” scenario came back into play, and people bought many of the “riskier” currencies. However, the pair is currently at the bottom of a massive symmetrical triangle that has support below at 1.01 as well. Because of this, the pair looks much supported at this point.

On a daily close below the triangle, we still would have to wait…..until the pair can break below the 0.99 level as it is the bottom of support. The pair will rise if there are bad headlines coming out, which seems to happen all the time. We are willing to buy on supportive action at this point, but are very aware of the downward pressures.

USD/CAD Forecast January 19, 2012, Technical Analysis
USD/CAD Forecast January 19, 2012, Technical Analysis

USD/CAD Fundamental Analysis Jan. 19, 2012, Forecast

Economic Events: (GMT)

13:30 CAD Manufacturing Sales (MoM) 0.90% -0.80%

Manufacturing Sales measures the change in the overall value of sales made at the manufacturing level.

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

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims 3590.00K 3628.00K

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.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the Swissier, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

15:00 USD Crude Oil Inventories 5.00M

The Energy Information Administration’s (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation.

Analysis and Recommendations:

Support and Resistance levels for tomorrow      
S:            1.0140   1.0105   1.0075
R:            1.0210   1.0250   1.0320

The USD/CAD is currently trading at 1.0123  down from opening at 101.52

The IMF noted today, that they would discuss increasing their funding to 1 trillion euros, at their meeting the end of February, though this news pushed the euro, it is an old story and just a discussion some 6 weeks from now. The USD was down a bit today, on some inflation comments. Tomorrows jobs reports in the US should meet forecasts and have little effect on the markets. Also tomorrow crude inventories reports will be out, but again no major changes here. If either reports exceed or fall short of forecasts, then there might be some action between the pair.

The US Government today turned down a Canadian company’s plans to build a pipeline from the US/Canada border to the Gulf of Mexico, to transport oil from the Canadian tar fields through Oklahoma and onto the Gulf of Mexico. This pipeline would serve many uses and have many benefits. The pipeline is seen as one way to deal with a supply situation in Oklahoma, the delivery point for Nymex oil, and also as an inexpensive transport to get oil from the Canadian tar sands and oil fields on the border of Canada to U.S. refinery industry along the Gulf of Mexico.

The most important benefit means less reliance on Middle Eastern oil imports. The pipeline project, however, has been under intense criticism from environmentalists.

The loonie will most likely trade sideways within a tight range for the next day or so.

USD/CAD Forecast Jan. 19, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 19, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 19, 2012, Fundamental Analysis
The USD/CAD pair dropped on Wednesday as the USD lost strength despite the German and Portuguese bond auctions that showed an incline in demand, and that made investors to buy more euros, accordingly, the euro rose against US dollar, while stocks in Europe pared early gains.

Euro advanced sharply against the U.S dollar after the International Monetary Fund said that it could expand its capacity to 1 trillion dollars from 385 billion dollar in order to support the global economy and prevent the debt crisis from spreading outside the euro-area region.

The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Thursday January 19:

Canada won’t release any new data, so fluctuating trading in the pair is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.

USD/CAD Forecast January 18, 2012, Technical Analysis

USD/CAD fell for the Tuesday session as the oil markets continued to grind higher. However, much like the oil markets, this pair has found itself winding up in a tighter and tighter manner as it has formed a daily triangle. The triangle is symmetrical, which of course shows real indecision. The oil markets are certainly to blame for this, and as a result this pair has to be traded while following the oil markets as well.

On a daily close outside of the triangle, we are willing to take a trade. The 1.01 level below is the start of a massive support area, and as a result, we feel longs are probably more likely to do well over shorts going forward. However, you cannot buy at this point – you need some kind of proof. The daily candle is a hammer, and this shows support as well. Because of this, we think it goes higher, and would be willing to take a short-term small position to reach the top of the triangle. However, no larger positions can be taken until we are out of the pattern.

USD/CAD Forecast January 18, 2012, Technical Analysis
USD/CAD Forecast January 18, 2012, Technical Analysis

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

USD/CAD Forecast Jan. 18, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 18, 2012, Fundamental Analysis
The USD/CAD pair dropped on Tuesday as the USD lost strength after markets turned optimistic, as the Chinese GDP showed an expansion in fourth quarter growth better than expected, adding that markets continued the sharp rebound after the upbeat European economic sentiment and the slowdown in inflation in addition to the Spanish bond sale.

On the other hand, sentiment continued to be positive after the European Financial Stability Facility (EFSF) sold the targeted amount of bills at an auction today which was met with strong demand.

And as already strongly expected the Bank of Canada left its benchmark rate unchanged as it did for this long past period to continue on supporting its stable and gradual growth and present economical conjuncture since that overall global and local conditions remain mixed and the global recession continue on limiting its sectors activities enhancement.

The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Wednesday January 18:

Canada will be absent over the session tomorrow, so fluctuating trading in the USD/CAD pair is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.

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

Economic Events:

10:30   CAD   BoC Monetary Policy Report

11:15   CAD   BoC Gov Carney Speaks

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

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

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

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

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

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

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

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

Analysis and Recommendations:

Support and Resistance levels for tomorrow       S:            1.0123   1.0134   1.0146

R:            1.0169   1.018     1.0192

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

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

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

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

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

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