USD/CAD Weekly Fundamental Analysis February 4 – 8, 2013, Forecast

FXEmpire   |  February 2 2013 3:18 EST

By FXEmpire.com

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 saw a high of 1.0100 well above parity, while the CAD was able to gain momentum on a strong GDP release this week and positive Chinese eco data to regain its footing at the end of the week to trade at 0.9965. The nations economy expanded 0.3 percent to an annualized C$1.56 trillion ($1.56 trillion), faster than the 0.2 percent median forecast in a Bloomberg News survey. The unemployment rate may have increased and jobs growth may have slowed in January, according to a separate survey before a Statistics Canada report Feb. 8.

Hedge fundsand other large speculators decreased their bets that the Canadian dollar will gain against theU.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers on an advance in the Canadian dollar compared with those on a drop — so-called net longs — was 35,057 on Jan. 29, compared with 57,952 a week earlier.

Futures on crude oil rose 1.8 percent this week to $97.61 a barrel inNew York, after touching the highest since Sept. 18. Western Canada Select, the benchmark for oil-sands bitumen, traded at a discount of $31.50 to U.S. West Texas Intermediate price Jan. 31, down from $32 Jan. 30. Thediscountreached $42.50 on Dec. 14.

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 daily updates and outlooks.

Major Economic Events for the week of January 28 February 1 actual v. forecast for the Canadian & US Dollar

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

Click here to read USD/CAD Technical Analysis.

Originally posted here