USD/CAD Forecast January 9th, 2012, Technical Analysis

USD/CAD had another bullish session on Friday as the traders reacted to several different influences at once. The Canadian jobs numbers weren’t very impressive, and the oil markets fell. Combined with the better than expected US Non-Farm Payroll numbers, and the Dollar got a bid against the Loonie. (It did against almost all currencies for that matter.)

The 1.03 level just above looks resistive and the recent bearishness in this pair seems to be predicated upon the drama unfolding between the Iranians and the Americans. The threats of closing the Strait of Hormuz really shook the markets, but as time goes on – it is becoming more and more apparent that the action won’t be taken. The area is vital to the oil trade, and as a result would lead to massive disruptions. Because of this – the Americans would almost have to intervene at that point. If the Iranians would wonder how things could turn out, they only need to look at both of their borders, as the Iraq and Afghani governments have both been overturned by the US military. There is little chance of the Iranians committing suicide, although one wouldn’t know it by the reactions earlier in the week.

As the world comes to grips with this, oil is starting to cool off. This pushes the demand for the Canadian dollar down a bit, and the flight to safety continues to push people into the US dollar. However, these two economies are very interconnected, so the moves in this pair tend to be very choppy, only to be followed by sudden spikes in one direction or another.

We still look for the Dollar to gain against the Loonie over time, but traders should be aware of the fact that the trade will grind for long stretches of time. We aren’t willing to sell this pair as even if the Iranians decided to pull this stunt, in the event of a war – people run to the Dollar anyway. Either way, the USD wins. Because of this, we are buying all pullbacks in this pair going forward.

USD/CAD Forecast January 9th, 2012, Technical Analysis
USD/CAD Forecast January 9th, 2012, Technical Analysis

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

The USD/CAD pair fell originally during the week previous, but then found some footing and rose rapidly as the Dollar picked up a bid against most other currencies later in the week. The oil markets often lead this pair around as Canada exports a lot of it to the United States. The Iranians have shocked the oil markets a few times recently with threats of the Strait of Hormuz being closed. Roughly 60% of the world’s oil supply runs through that waterway, and traders bid up oil as a result before asking any serious questions.

The oil markets are starting to realize that perhaps it is an empty threat as the US Navy is sending more carriers to the region to thwart any attempt to close the waterway. The US has explicitly stated that the move would be an act of war, and this would lead to the Iranian Air Force ceasing to exist in less than a week. The Iranian Navy would be at the bottom of the Persian Gulf quicker than that most likely. Because of this, there is almost zero chance that the Iranians will do this, and in fact they have already been working through back channels to calm the situation down.

The charts have been choppy, but with an upward bias. Essentially, the only reason for this chart to fall has been the surge in oil prices, something that looks to be subsiding a bit at the moment. The weekly candle is a hammer that extends down to the 1.01 level – showing that area as being very supportive. The 1.03 and 1.04 levels above are resistive, so barring any shocks, this pair will struggle to gain, but we believe over time they will. The choppiness should continue, which quite honestly is the norm of this pair anyway. With this in mind, we are ready to buy pullbacks as the oil markets cool off. Of course, we will have to watch the Light Sweet Crude markets for any sudden moves, and as long as we can stay under $105, we feel buying this pair should be the way forward.

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

US Economic Data Up… Markets Ignore

While Friday’s big US jobs report beat expectations, some analysts said it was skewed by seasonal factors. Others said the response was muted because investors were anticipating a big gain.

Investors are so worried about the European situation, that all else palls in comparison. US jobs reports beat forecasts, but still did not excite investors. Unemployment dropped unexpectedly, and still investors did not respond. Retail sales were up and consumer sentiment was climbing. US Automotive sales and manufacturing increased.

An entire week of upbeat US financial data and little reactions in the markets, with the exception of the continued nosedive of the euro, which closed below the 1.28 mark hitting bottom at 1.2775, where will this end.

Day by new worries mount in the eurozone and still nothing seems to be accomplished. Unfortunately for America, they are not able to rejoice in what looks like the end of a very bad few years. The pressures, worries and unpredictability of the EU countries are putting a damper on everything. US firms are reporting profits, but with the negative news from the EU and with the US unable to ring fence the effects that might come from a failure of the euro, a country withdrawing from the EU or a country defaulting on their debts, no one can sit back and enjoy the coming of better times in the US, for at any minute the european crisis could end up on the shores of the US.

Compounded with the soaring price of oil on threats from the Iranians, mounting tensions in the Middle East along with the Syrian unrest, nerves are frayed; investors just do not have an appetite for risk.

In any event, traders said the market remains stymied by worries about government debt and banking problems in Europe.

Government borrowing costs remain at elevated levels in Europe, with the yield on the 10-year Italian bond above 7% yet again. Spanish bond yields also remain on the high side, with the 10-year hovering around 5.6%.

The U.S. economy gained 200,000 jobs in December, according to the Labor Department. Economists had expected a gain of 150,000 jobs.

In addition to the stronger jobs numbers, the unemployment rate fell more than expected, sliding to 8.5% in December.

Economists were forecasting the unemployment rate to tick up to 8.7% from 8.6% in November, mainly due to discouraged workers — who had previously given up their job searches — re-entering the labor force.

Stocks were quiet Friday. And that after a flat day in Thursday despite two other encouraging labor reports — payroll processor ADP said 325,000 private sector jobs were added last month and weekly jobless claims fell again.

Even more telling is the fact that long-term bond yields slipped Friday morning. The 10-year Treasury dipped back below 2%.

Bond rates fall when investors buy bonds. It may seem counterintuitive, but lower yields tend to be more of a sign of a weak economy because it shows investors want something less risky than stocks. Less risky in today’s market, means some protection in case the European crisis gets out of control.

USD/CAD Weekly Forecast January 9-13, 2012, Fundamental Analysis

USD/CAD Weekly Forecast January 9-13, 2012, Fundamental Analysis
USD/CAD Weekly Forecast January 9-13, 2012, Fundamental Analysis
The USD/CAD pair rebounded to the downside last week, as the dollar took advantage of the safety demand amid the undergoing concerns in the euro area.

Also the jobs reports from both Canada and the United States were mixed, as for Canada, the unemployment rose unexpectedly to 7.5% in December from 7.4% in November, where employers added nearly 17.5 thousand jobs, while U.S. employers added 200 thousand jobs, and accordingly the unemployment fell from 8.7% to 8.5%.

This week, the main focus will be on the BoE rate decisions, trade, manufacturing and inflation data from the U.K. while the U.S. will release retail, trade and confidence, as well as other data.

Traders will continue to focus their attention on Europe this coming week, where the European Central Bank is expected to keep its rates unchanged, in order to ease tensions in markets and help support confidence amid the worsening debt crisis in the euro zone region.

Moreover, several euro zone nations are preparing for bond auctions, where all eyes will be focused on the yields and demand on those bonds, noting that the euro area region has more than 157 billion of debt maturing in the first quarter half of 2012.

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 9:

At 20:00 GMT the United States will provide markets with the consumer credit figure for November, which could have narrowed to $7.000 billion from $7.645 billion.

Auctions:

Slovakia will auction bonds at 10:00 GMT, while Germany will auction bonds at 10:15 GMT and finally France will sell bonds at 14:00 GMT.

Tuesday January 10:

The United States will join the session at 15:00 GMT with the wholesale inventories index for November, which could have expanded by 0.5% from the previous expansion of 1.6%.

Auctions:

Netherlands will sell bonds at 09:00 GMT.

Austria, Malta and Greece will auction bonds at 10:00 GMT.

Slovenia will auction bonds at 12:00 GMT.

Wednesday January 11:

The Federal Reserve will provide markets with the Beige Book at 19:00 GMT.

Auctions:

Germany will sell bonds at 10:15 GMT.

Thursday January 12:

The United States will join the session at 13:30 GMT with the retail sales index for December, where the advanced index is expected to expand in a steady pace by 0.2%, while the retail sales index less autos is projected to expand by 0.3% from 0.2%.

The United States will also release the initial jobless claims (Jan 7), where the prior reading was 372 thousand claims.

At 15:00 GMT the United States will provide markets with the business inventories index for November, which could have grown by 0.4% from 0.8%.

At 19:00 GMT the United States will end the session with the monthly budget statement, which is expected at -$79.0 billion.

Auctions:

Spain will auction bonds at 09:30 GMT, while Italy will auction bonds at 10:00 GMT

Friday January 13:

The United States will join the session at 13:30 GMT with the import price monthly index for December, which is expected to drop by 0.1% from the previous expansion of 0.7%.

The United States will also provide the trade balance figures for November, where the trade deficit is expected to widen to $44.9 billion from $43.5 billion.

Canada will release the international merchandise trade balance for November at 13:30 GMT, where the trade deficit is expected to widen to 0.45 billion CAD from the prior deficit of 0.89 billion CAD.

Auctions:

Italy will auction bonds at 10:00 GMT.

USD/CAD Forecast Jan. 9, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 9, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 9, 2012, Fundamental Analysis
The USD/CAD pair rose as the U.S dollar gained strength after the jobs report, as the Nonfarm payrolls increased by 200,000 jobs, well above median estimates of 155,000 jobs, furthermore, unemployment rates plummeted cheerfully to 8.5 percent from 8.7 percent in December.

Moreover, the euro declined fuelled with concerns that the euro zone might not be able to find a comprehensive solution to the debt crisis, which will make it more difficult for European banks to raise capital, thereby might become more exposed.

Now, eyes will be spotted on this year, and the performance of the European economy, especially after the ECB lent the European banks huge amount of money, and if that money will help the euro zone to continue recovery process amid big challenges.

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 9:

Canada will release the report of building permits for the month of November; it is expected to show a decline by 0.4%. Moreover, eyes will still focused on Europe and the crises that could cause any change in trading.

USD/CAD Forecast January 6th, 2012, Technical Analysis

USD/CAD rose during the session on Thursday as the oil markets sold off. The levels are still high in those markets still, so it should be watched for future direction. The 1.01 level below starts massive support down to 0.99, and the 1.04 area above is massive resistance. With this in mind, we are expected a sideways market for a while and with this in mind we are playing this as a range bound market that looks consolidative. A daily close above 1.04 or below 0.99 is what it would take for us to buy or sell for anything more than a quick trade at the moment.

USD/CAD Forecast January 6th, 2012, Technical Analysis
USD/CAD Forecast January 6th, 2012, Technical Analysis

USD/CAD Forecast Jan. 6, 2012, Fundamental Analysis

The USD/CAD pair rose as the U.S dollar strengthened with yesterday’s German auction and today’s French auction markets turned pessimistic and the Euro slipped below $1.28, where France’s borrowing cost surged again, while demand for the French securities was weak, which raised fears in the market that France, the second largest economy in the euro-area region, could lose its AAA credit rating soon.

Fears started growing this week that euro zone leaders might fail to find a comprehensive solution to the debt crisis which could drag the region into a deep recession and infect the global economy especially after Greece warned it might exit the euro zone if the country won’t get more financing.

Now, eyes will be spotted on this year, and the performance of the European economy, especially after the ECB lent the European banks huge amount of money, and if that money will help the euro zone to continue recovery process amid big challenges.

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 6:

Canada will release the report of unemployment for the month of December; it is expected to show unchanged reading of 7.4%. Moreover, eyes will still focused on Europe and the crises that could cause any change in trading.

The US Data is in… How Do You Interpret It?

The ADP report released today showed that private-sector payrolls were up 325,000 in December, led by the service-providing sector and small businesses. The November level was slightly revised downward to 204,000 from an estimate of 206,000. Markets look to ADP’s report on private-sector payrolls to provide some guidance on the U.S. Labor Department’s jobs estimate, to be released tomorrow which includes information on both private- and public-sector payrolls.

However, analysts have noted seasonal-adjustment issues that have led to past ADP estimates for December substantially missing the government’s data. Economists polled by” Market Watch” expect the Labor Department’s report tomorrow to show strengthening employment, with overall nonfarm payrolls up 150,000 in December, compared with 120,000 in November.

Economists also expect the unemployment rate to rise to 8.7%. The US unemployment figures will be release tomorrow as well.

Overall, the reports show that there is the promise of a recovery. Combining this with earlier data on the automobile industry, there seems to be positive note in manufacturing and hiring.

The downside of this week’s reports is beginning to come from the retail sector, reports and releases are beginning to show that retailers had a remarkable end of November with Black Friday and Cyber Monday, which was generated in part by pent up demand and earlier shoppers getting their shopping done with the best deals early. Figures are beginning to show that December was a very slow month for retail and that the only with the last minute aggressive bargains and sales did customers open their wallets.

Sales were increased in the last few days at the sacrifice of profit.

Target Corp. has just reported their holiday figures. As reported in Market Watch,  Target Corp.TGT -4.00% said on Thursday that its December same store sales rose 1.6%. Analysts had expected same-store sales to rise 3.1%, according to a Thomson Reuters poll. Total December sales were $10.14 billion, up 2.6% from a year ago. “December sales were below our expectations as growth in Grocery and Beauty offset softness in Electronics and Music, Movies & Books,” Target CEO Gregg Steinhafel said in a press release. Target also trimmed its fourth-quarter earnings outlook to $1.35 to $1.43 a share from a previous $1.43 to $1.53 a share.

This is the same message being heard throughout the US from major retailers with the major exception of Sears-Kmart, who had a drop in sales and profits and announced the closing of 120 stores.

J.C. Penney Co. JCP -5.44% dropped 10% on today after the company posted same-store sales results and said it would report a fourth-quarter loss of 30 cents to 45 cents a share. The company said the loss would include 50 cents to 55 cents a share in restructuring and management transition charges.  December same-store sales grew 0.3%, while total sales for the month fell 2.3%.

Whereas Nordstrom, TJX and Ross stores all reported increases in sales of up to 9%. TJX also announced a 2-1 stock split due to increased sales in December. While Macy’s has upped their guidance for December.

The fact that many economists were predicting slow sales or negative sales in December, these reports also support a slow turn around in the economy and in consumer spending.  The sacrifice of profit is hurting the bottom line of many of the retailers.

USD/CAD Forecast January 5th, 2012, Technical Analysis

USD/CAD rose during the Wednesday session, but only somewhat. The daily candle looks much like a shooting star at the bottom of a fall – a sign that bearish pressure could be mounting. The area just below is massive support though, so at best – this pair looks confused. The Dollar is the currency that most traders are buying these days, but the Canadian dollar might not be the best one to buy it against. The pair looks range bound between 0.99 and 1.04 in very sloppy trading. The 1.01 level also looks a bit supportive, so this pair will continue to be messy. We are avoiding this pair at the moment.

USD/CAD Forecast January 5th, 2012, Technical Analysis
USD/CAD Forecast January 5th, 2012, Technical Analysis

USD/CAD Forecast Jan. 5, 2012, Fundamental Analysis

USD/CAD Forecast Jan. 5, 2012, Fundamental Analysis
USD/CAD Forecast Jan. 5, 2012, Fundamental Analysis
The USD/CAD pair rose as the U.S dollar strengthened with concerns bouncing back to market at early morning despite data that was released from Euro Zone today, as debt crisis worries over Europe forced investors to avoid higher-yielding assets such as Euro, Sterling Pound and stocks.

Germany sold 4.06 billion euros of 10-year bonds on average yield of 1.93% compared with the 1.98% yield recorded an auction earlier, where German borrowing cost fell today by 5 basis points as investors still consider German Bunds as the safe haven in the euro-area region.

However, and despite the 1.3 times bid-to-cover ratio, Germany didn’t meet the maximum target of 5 billion euros at the auction today, raising downside pressures on the euro and stocks throughout the trading session.

Furthermore, U.S factory orders came below expectations during the month of November, factory orders inclined by 1.8% compared with the prior revised reading of -0.2% and below expectations of 2.0%.

Now, eyes will be spotted on this year, and the performance of the European economy, especially after the ECB lent the European banks huge amount of money, so we expect that money should help the euro zone the pick up the recovery process amid ongoing challenges.

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 5:

Canada will release the Ivey Purchasing Managers’ Index for the month of December. the Index is the Canada business activity index may accelerate to 53.0. Moreover, eyes will be still focused on Europe and the crises that could impact traders with year-start.

USD/CAD Forecast January 4th, 2012, Technical Analysis

USD/CAD fell hard on Tuesday as traders continue to buy the oil contracts. While the US economy continues to expand, the oil markets are being jolted by troubles in the Persian Gulf area between Iran and its neighbors. Because of the games being played, there is a fear of the Iranians closing the Strait of Hormuz, an area where 60% of the world’s oil flows through. However, these fears are unfounded, as the United States would declare this as an act of war, and the Iranians know this.

Possibly helping the pair on Tuesday is the fact that the “risk on” sentiment came back with it being the first real trading day of the year. (Optimism seems to reign supreme at the start of each new trading year.) However, not much has changed over the weekend to warrant all of this optimism as far as we can see.

The $103 level has been broken in the oil markets, and the next test will be $105. If that level gives way, the demand for the Canadian dollar will be tremendous. The pair fell to the 1.01 level for the session, but bounced slightly towards the end of the day. The volume could perhaps be a bit low as well, as the all-important Non-Farm Payroll numbers come out at the end of the week, and combined with the holidays just wrapping up, there are a lot of traders that might be missing at the moment.

A break below 0.99 would be the point where the possibility of bullish action overall in this pair would have to be rethought, but in the mean time – we still see far too many risks out there to get too far into the “risk on” trade. The US dollar will more than likely continue to be strong going forward, and this area we are approaching should start to offer solid support. We are looking for a bullish candle to buy this pair on, especially the closer we get to parity. If we get that candle, we would buy and aim for 1.03 or so. We still expect this pair to be choppy though, and will trade is as a short-term market only.

USD/CAD Forecast January 4th, 2012, Technical Analysis
USD/CAD Forecast January 4th, 2012, Technical Analysis

USD/CAD Forecast Jan. 4, 2012, Fundamental Analysis

The USD/CAD pair following ISM manufacturing report which rose for the month of December to reach 53.9 better than forecasted 53.4, taking into consideration that the US data for November and December was better than expected till now, not to forget that holiday season strengthened economic activities in USA.

Now, eyes will be spotted on this year, and the performance of the European economy, especially after the ECB lent the European banks huge amount of money, and if that money will help the euro zone to continue recovery process amid big challenges.

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 4:

No economic data will be released from Canada so eyes will still focused on Europe and the crises that could cause any change in trading.

USD/CAD Forecast January 3, 2012, Technical Analysis

USD/CAD sat still during the session on Monday as the oil markets also experienced very little in the way of action. The real volume will pick up after this week, so the markets could be a bit quiet going forward. The US dollar has been very resilient recently, a trend we expect to see continue. The parity to 0.99 levels below looks very supportive, and that level would have to be broken to the downside for us to consider selling this pair as there is so much congestion below current levels. The upside looks resistive at the 1.04 level, but the recent action has shown that the bulls come in and support this pair every time it falls. With this in mind, we are thinking that the best move is short-term scalps to the upside in this pair currently.

USD/CAD Forecast January 3, 2012, Technical Analysis
USD/CAD Forecast January 3, 2012, Technical Analysis

The New Year Kicks Off with Economic Indicators from the US

On Tuesday, the Institute for Supply Management is set to release its report on December manufacturing.

Why do investors care?  It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy;

Another possible hot potatoe could be the release of minutes on Tuesday from the Federal Open Market Committee’s Dec. 13 meeting. While no one expects anything to come out of the minutes, investors will be looking for some affirmation from the Fed that the U.S. economy is improving, however moderately, with an acknowledgment that global factors still wield substantial influence

Then, on Wednesday comes data for November factory orders along with December U.S. motor vehicle sales. This report contains a revision of the Durable Goods Orders data released about a week earlier, and fresh data regarding non-durable goods and it’s a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders. Along with the automobile sales report, it’s a sign of consumer confidence – rising demand for expensive durable goods shows that consumers are confident in their future financial position and feel comfortable spending money

On Thursday, ADP will release its December employment figures, and ISM will release its December non-manufacturing data. The ADP report Leads the government-released employment data by 2 days, and has slowly demonstrated its predictive qualities since its May 2006 debut. Source changed the calculation methodology in Feb 2007 and Dec 2008 to better align with the government’s data. ADP provides payroll services to a large number corporations in the US. They use the data collected from their customers to derive the overall employment estimations. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

Thursday and Friday figures on the December unemployment rate and nonfarm payrolls are released. The unemployment report is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes; Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

To end the week on Friday, U.S. retailers will release same-store sales data for December. (These may be released on Thursday. The markets will react to the final outcome of retail sales, did retailers have a good holiday season or not.

All in all it is a week of significant indicators for the US economy. Unless another crisis presents itself in Europe the markets should be driven by US data.

USD/CAD Forecast for the Week of January 2, 2012, Technical Analysis

USD/CAD fell during the week as the oil markets got a bit of a bid. However, the oil markets are running into massive resistance above, and the next move could very well be down. With this in mind, the hammer that the weekly chart in USD/CAD makes even more sense as the Canadian dollar will continue to be sold as oil falls. The move has been choppy lately, but the trend is starting to favor the upside from here. We would be comfortable buying above the 1.03 level, while watching the oil markets as a guide. Selling isn’t a thought until under the 0.99 level.

USD/CAD Forecast for the Week of January 2, 2012, Technical Analysis
USD/CAD Forecast for the Week of January 2, 2012, Technical Analysis

USD/CAD Forecast January 2, 2012, Technical Analysis

USD/CAD fell on Friday, but did manage a bit of a bounce as the Dollar got a bid in the US session. The oil markets fell, and this always gives the Canadian dollar a bit of a selloff. The hammer looks like it is based upon the 1.02 area, and that the upside is more than likely the next move. We see massive support all the way down to the 0.99 level, so selling at this area isn’t possible to us anyway.

Going forward, we will be watching the $103 level in the Light Sweet Crude markets. If this level gives way to the bulls, there is a real chance this pair could fall rapidly. However, there is a ton of support below all the way to the 0.99 level, and the move down is more than likely going to be met with a lot of choppiness at first.

A break to the upside makes more sense to us as the Dollar should continue to get a “safety bid” going forward. The 1.03 level could be resistive, but it should also only be a minor area to overcome as it has been broken to the upside and downside several times recently. The real volume coming back in January will be vital to the future direction of not only this pair, but the oil markets in general, both of which as interconnected.

The Canadian economy could start to suffer from the global slowdown, but the biggest customer of Canada is the United States. This is one of the things that keep the Loonie elevated. The relationship should continue, but the oil markets losing luster could be good for about 10 handles before it is all said and done. The pair has several resistance points above in the form of 1.05, 1.07, and 1.10. The levels will all continue to produce reactions, but we shouldn’t forget that this pair melted up a few years ago during the financial crisis. If we have a meltdown in Europe, this pair will skyrocket much quicker than expected. Either way, we will only buy on dips as long as we are above the 0.99 level.

USD/CAD Forecast January 2, 2012, Technical Analysis
USD/CAD Forecast January 2, 2012, Technical Analysis

USD/CAD Weekly Forecast January 2-6, 2012, Fundamental Analysis

The USD/CAD pair declined to a three-week low, as the Canadian dollar was supported by an upside punch in crude oil prices, after oil skipped the $100 levels a barrel on concerns of supply disruption from Iran this week and Italian bond auction signaled a strong in drop in yields.

No economic data was released fromCanadain the past week, but data from theUnited Statesmainly showed mixed performance, with an expected drop in home prices in 20 metropolitan cities in the U.S added to signs housing market remains pressured down by foreclosures, while consumer confidence in the U.S bounced up to its highest level since April 2011.

Though 4-week moving average for jobless claims in the U.S dropped to a three-year low in the past week, a rise in number of Americans filing for unemployment benefits in the December 24 week highlighted the ongoing struggle of labor markets to seek safety in December.

In addition, the Chicago-based ISM signaled that business activity in the U.S expanded more than forecast in December, while an index of pending home sales in the U.S increased well above forecast in November, indicating the sector which first triggered the 2008 crash is picking up moderately.

Jumping to the 17-bloc euro area, the Rome-based Treasury of Italy did a nearly good job trying to raise nearly 20 billion euros at its two bond auctions in the past week.Italysold 9 billion euros on 179-day bills and 1.733 billion euros of 2012 debt at an auction on Wednesday, while sold 7 billion euros of longer-maturing debt the day after.

Debt crisis risks occupied the headlines as usual, sending the euro against the US dollar to its lowest level since September 2010 in the past week, as the slightly disappointing Italian auction of longer-term debt and lenders’ outclassed demand of ECB’s three-year loans spooked traders and failed to cool stoked markets before the year end.

High level of uncertainty in markets could provide the USD/CAD pair with more bullish momentum, where traders will be eyeing developments in the 17-nation euro area, and accordingly, we should expectEuropeto dominate the pair’s movement next week.

Nonetheless, if optimism spreads through markets, the USD/CAD pair will decline, as demand for higher yielding assets is likely to rise in that case, and that should provide the Canadian dollar with momentum.

Highlights for this week that will probably affect Crude Oil direction are:

Monday January 2:

Markets and banks will be closed on Monday to celebrate the New Year’s DayHoliday.

Tuesday January 3:

TheUnited Stateswill join the session at 15:00 GMT with the Construction Spending Monthly Index for November, which could have expanded by 0.5% from 0.8%

TheUnited Stateswill also release the ISM Manufacturing for December, with expectations the index have expanded to 53.2 from 52.7.

At 19:00 GMT the Federal Reserve will provide markets with the Minutes of the FOMC last meeting.

Wednesday January 4:

TheUnited Stateswill join the session at 15:00 GMT with the factory orders index for November, which could have expanded by 2.0% from the previous drop of 0.4%.

Thursday January 5:

TheUnited Stateswill join the session at 13:15 GMT with the ADP Employment Change from December, where the private sector is projected to add 175 thousand additional jobs compared with the previous addition of 206 thousand jobs.

At 13:30 GMT theUnited Stateswill release the Initial Jobless Claims (DEC 31), where jobless claims are expected lower at 375 thousands compared with the prior 381 thousands.

At 15:00 GMT theUnited Stateswill provide the ISM Non-Manufacturing Composite index for December, which could have expanded to 53.0 from 52.0.

Canada will be joining the session as well, as Canada’s indexes of industrial product and raw material prices will be due out Thursday, where industrial product price index in expected to fall by -0.3% from -0.1% in November.

In addition, Canada Ivy Purchasing managers’ index is forecasted to ease at 59.1 from 59.9 in December.

Friday January 6:

TheUnited Stateswill join the session at 13:30 GMT with the Monthly Jobs Report for December, with expectation the economy will add 150 thousands new jobs compared with the prior addition of 120 thousands, yet the unemployment rate is projected to climb to 8.7% from 8.6%. The average hourly earnings monthly index could have slightly expanded by 0.2% from the previous drop of 0.1%.

Canadaemployment report will be also released on Friday, where projections suggest thatCanada’s unemployment rate will remain steady at 7.4% in December while the net change in employment will show a gain of 14.3 thousand jobs in December from the 18.6 thousand shed in November.

USD/CAD Forecast Jan. 2, 2012, Fundamental Analysis

The USD/CAD pair dropped though no data was released by major economies during the last trading day of 2011, noting that the Canadian dollar gained strength slightly, however worsening debt crisis in Europe made traders seek safe haven like the U.S. Treasuries during the last days.

Now, eyes will be spotted on the coming year, and the performance of the European economy, especially after the ECB lent the European banks cheap money, and if that money will help the euro zone to continue recovery process amid big challenges.

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.

Tuesday January 3:

No economic data will be released from Canada so eyes will still focused on Europe and the crises that could cause any change in trading.

USD/CAD Forecast December 30, 2011, Technical Analysis

USD/CAD fell on Thursday as the oil markets rebounded from the Wednesday fall. The pair looks as if it is sitting on top of a massive support zone, and the fall on Thursday could have been exacerbated by the lack of volume in the markets presently. With this in mind, we actually prefer buying the safe haven US dollar, but we are currently chopping around in a massive consolidation zone – so we are flat in this pair for the next day or two.

USD/CAD Forecast December 30, 2011, Technical Analysis
USD/CAD Forecast December 30, 2011, Technical Analysis

USD/CAD Forecast Dec. 30, 2011, Fundamental Analysis

The USD/CAD pair depreciated on Thursday, after jobless claims rose last week above expectations, while Chicago PMI index came better than forecasted in December, in addition, sales of pending homes in the U.S climbed 7.3 percent above expectations of 1.5 percent.

While The euro fell to a 15-month low against the US dollar as Italian bond yields rose after the nation sold less than its maximum target at an auction, highlighting funding problems amid the region’s sovereign-debt crisis.

Still, the light is spotted on this period of time, as this year is coming in to an end as this day is the last trading day before the New Year infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

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

Friday December 30:

No economic data will be released from Canada so eyes will be focused on Europe and the crisis that could impact trading during the last trading day of the year.