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

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Updated: Jan 1, 2011, 00:00 GMT+00:00

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

USD/CAD Weekly Fundamental Analysis April 9-13, 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%.

Analysis and Recommendation:

The USD/CAD traded between 0.9998 ( high ) and 0.9888 ( low ) this week. There were several positive reports in Canada all coming towards the end of the week.

The disappointment was the drop in the Ivey PMI, which fell to 63.5 from expectation of 66.0, although still a positive reading. The surprise this week was building permits and unemployment, which both came in well above forecast, giving some added strength to the CAD.

The Looney was fighting against very strong data out of the US and the release of the FOMC minutes which pushed the USD upwards against all of its trading partners.

Also a fall in commodities prices this week also hurt the CAD as gold and oil both fell.

Date	Last	Open	High	Low	Change %
04/06/2012	0.9918	0.9932	0.9934	0.9918	-0.14%
04/05/2012	0.9932	0.9965	0.9998	0.9907	-0.33%
04/04/2012	0.9964	0.9912	0.9974	0.9908	0.52%
04/03/2012	0.9912	0.9902	0.9929	0.9888	0.10%
04/02/2012	0.9902	0.9964	0.9990	0.9889	-0.62%
04/01/2012	0.9963	0.9960	0.9964	0.9952	0.03%