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 Friday at 0.9936 while it traded at 0.9806 on the previous Monday’s open. The USD soared after a week of positive eco data changed the view of the traders reducing the likelihood of additional stimulus this week at the FOMC meeting. There are positive signs that the US recovery is back on track.
Date
|
Last
|
Open
|
High
|
Low
|
Change %
|
Oct 19, 2012
|
0.9936
|
0.9849
|
0.9940
|
0.9846
|
0.89%
|
Oct 18, 2012
|
0.9848
|
0.9784
|
0.9860
|
0.9764
|
0.65%
|
Oct 17, 2012
|
0.9784
|
0.9859
|
0.9872
|
0.9773
|
-0.76%
|
Oct 16, 2012
|
0.9859
|
0.9811
|
0.9878
|
0.9803
|
0.49%
|
Oct 15, 2012
|
0.9811
|
0.9806
|
0.9818
|
0.9770
|
0.05%
|
Across the border things are not as sure. Retail sales for August will be released on October 23 and analysts anticipates a decent 0.4% month-on-month print on the strength of an increase in gasoline prices, which averaged C$1.2725 at the pump in August vs. C$1.2240 in July. We also think that car sales were higher, up 3% after seasonal adjustment, although new vehicle sales only make up a component of sales at new vehicle dealers (services are a major part as well). The wild-card is that we saw stronger sales at large retailers than is typical during August, which often though not always correlates well with broader retail sales. In short, all signs are pointing to a solid retail sales number.
The Bank of Canada will make a rate announcement on the 23rd and issue its MPR the next day.
After speeches this week by the Governor of the BoC it is unlikely that markets will see any play from the 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 recent analysis and information in our weekly reports and we provide dailyupdates and outlooks.
Major Economic Events for the week of October 15-19, 2012 actual v. forecast
Date
|
Currency
|
Event
|
Actual
|
Forecast
|
Previous
|
Oct. 15
|
GBP
|
Rightmove House Price Index (MoM)
|
3.5%
|
-0.6%
| |
CHF
|
PPI (MoM)
|
0.3%
|
0.2%
|
0.5%
| |
USD
|
Core Retail Sales (MoM)
|
1.1%
|
0.6%
|
1.0%
| |
USD
|
Retail Sales (MoM)
|
1.1%
|
0.8%
|
1.2%
| |
USD
|
NY Empire State Manufacturing Index
|
-6.2
|
-4.5
|
-10.4
| |
Oct. 16
|
GBP
|
Core CPI (YoY)
|
2.1%
|
2.1%
|
2.1%
|
GBP
|
CPI (YoY)
|
2.2%
|
2.2%
|
2.5%
| |
GBP
|
PPI Input (MoM)
|
-0.2%
|
-0.1%
|
1.9%
| |
GBP
|
CPI (MoM)
|
0.4%
|
0.4%
|
0.5%
| |
GBP
|
PPI Input (YoY)
|
-1.2%
|
-0.8%
|
1.1%
| |
EUR
|
CPI (YoY)
|
2.6%
|
2.7%
|
2.7%
| |
EUR
|
German ZEW Economic Sentiment
|
-11.5
|
-15.0
|
-18.2
| |
EUR
|
ZEW Economic Sentiment
|
-1.4
|
-1.1
|
-3.8
| |
EUR
|
Core CPI (YoY)
|
1.5%
|
1.6%
|
1.5%
| |
USD
|
Core CPI (MoM)
|
0.1%
|
0.2%
|
0.1%
| |
USD
|
CPI (MoM)
|
0.6%
|
0.5%
|
0.6%
| |
USD
|
CPI (YoY)
|
2.0%
|
1.9%
|
1.7%
| |
USD
|
Core CPI (YoY)
|
2.0%
|
2.0%
|
1.9%
| |
USD
|
TIC Net Long-Term Transactions
|
90.0B
|
45.3B
|
67.2B
| |
USD
|
Industrial Production (MoM)
|
0.4%
|
0.2%
|
-1.4%
| |
Oct. 17
|
GBP
|
Average Earnings Index +Bonus
|
1.7%
|
1.6%
|
1.6%
|
GBP
|
Claimant Count Change
|
-4.0K
|
-1.0K
|
-14.2K
| |
USD
|
Building Permits
|
0.894M
|
0.810M
|
0.801M
| |
USD
|
Housing Starts
|
0.872M
|
0.770M
|
0.758M
| |
Oct. 18
|
GBP
|
Retail Sales (MoM)
|
0.6%
|
0.4%
|
-0.1%
|
GBP
|
Retail Sales (YoY)
|
2.5%
|
2.1%
|
2.5%
| |
EUR
|
Spanish 10-Year Obligation Auction
|
5.458%
|
5.666%
| ||
USD
|
Initial Jobless Claims
|
388K
|
365K
|
342K
| |
USD
|
Continuing Jobless Claims
|
3252K
|
3275K
|
3281K
| |
USD
|
Philadelphia Fed Manufacturing Index
|
5.7
|
1.0
|
-1.9
| |
Oct. 19
|
USD
|
Existing Home Sales
|
4.75M
|
4.75M
|
4.83M
|
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 American and Canadian Markets.
Date
|
Time
|
Currency
|
Event
|
Forecast
|
Previous
|
Oct. 23
|
13:30
|
CAD
|
0.4%
| ||
13:30
|
CAD
|
0.7%
| |||
14:00
|
CAD
|
1.00%
|
1.00%
| ||
Oct. 24
|
15:00
|
USD
|
385K
|
373K
|
Government Bond Auction
Date Time Country
Oct 22 09:10 Norway
Oct 23 08:30 Spain
Oct 23 14:30 UK
Oct 23 17:00 US
Oct 24 09:10 Sweden
Oct 24 09:30 Germany
Oct 24 14:30 Sweden
Oct 24 15:30 Italy
Oct 24 16:30 US
Oct 25 00:30 Japan
Oct 25 09:10 Sweden
Oct 25 15:30 Italy
Oct 25 17:00 US
Oct 26 09:10 Italy
Click here for updated USD/CAD News.
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