USD/CAD Fundamental Forecast – January 20, 2016

Analysis and Recommendations:

The USD/CAD fell 103 points to 1.4458 ahead of the Bank of Canada meeting today. A bit of stability in the oil markets and hopes of stimulus from China supported commodities and currencies today.  China’s economy grew by 6.9 per cent in 2015, according to data released by Chinese authorities. Analysts had expected this growth rate as well as a 6.4 per cent expansion in industrial production and a 10.7 per cent increase in retail sales.

The result comes amid widespread concern about China’s handling of a slowing economy, causing global markets to rock wildly.

But rather than responding solely to macro data, analysts see the Australian dollar at the mercy of price action.

“The problem is the Aussie is suffering from a sell-in-rallies mentality rather than people wanting to buy on the dips,” said Dino Spinelli, head of foreign exchange at UBS. “People are more likely to sell on weaker data than buy on the strength of the data.”

Much of these happenings occurred over a backdrop of falling oil prices, leading to a situation we haven’t seen in years. A Brent oil price, the benchmark of European crude prices, is actually below West Texas Intermediate (WTI) prices, the benchmark for North American prices.

The last time that happened was before the shale boom in the United States. Investors are pricing in Iran’s return to global markets as a negative because the industry already has an excess of oil; Iranian deliveries will just deepen the price slump.

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Wednesday January 20, 2016

Government Bond Auctions

Date Time and Country

Jan 20 11:03 Sweden SEK 4bn 1% Nov 2026 Bond

Jan 20 11:30 UK GBP 4bn 1.5% Jan 2021 Gilt

Jan 21 10:30 Spain Auctions Bonos/Obligaciones

Jan 21 10:50 France Holds bond auction

Jan 21 19:00 US Holds 10-year TIPS auction

Jan 21 17:20 Italy Details of CTZ/linker auction on Jan 28

Jan 21 17:20 Sweden Details of I/L auction on 28 Jan

Jan 21 n/a US Details of 2-yr note auction on Jan 26

Jan 25 11:30 Germany EUR 1.5bn Jan 2017 Bubill

Jan 25 13:00 Norway Details of bond auction on Jan 27

Jan 25 17:20 Italy Details of BTP/CCTeus on 28 Jan

Jan 26 11:10 Italy Holds CTZ/linker bond auction

Jan 26 n/a US Holds 2-year note auction

Jan 27 11:05 Norway Holds bond auction

Jan 27 11:30 Germany EUR 1bn 2.5% Aug 2046 Bund

Jan 27 17:20 Sweden Details of bond auction on 03 Feb

Jan 27 n/a US Holds 2-year FRN auction

Jan 27 n/a US Holds 5-year note auction

Jan 28 11:03 Sweden Holds I/L bond auction

Jan 28 11:10 Italy Holds BTP/CCTeus auction

Jan 28 n/a US Holds 7-year note auction

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11