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USD/CAD forecast for the week of June 6, 2016
The USD/CAD pair initially tried to rally during the course of the week, but turned back around to form a somewhat negative candle. This is more than likely going to continue to be a market that sees quite a bit of volatility, but having said that, it’s more than likely that oil markets will also have a huge part of plan this market. Ultimately, this market is probably one that is going to be difficult to trade off of long-term charts as there has been so much noise in the area we find ourselves.
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May 2016 Canadian Ivey PMI 49.4 vs 51.5 exp
May 2016 Canadian Ivey PMI report 7 June 2016
USD/CAD: Loonie Hits Fresh 1-Month High Amid Increased Risk Appetite
The USD/CAD pair edged down 0.27% and traded at C$1.2782, after reaching C$1.2764 earlier in the session - a level last seen at the beginning of May.
Traders were largely preoccupied with interpreting Federal Reserve (Fed) Chair Janet Yellen’s comments from Monday, in which she avoided the topic of a possible rate hike this summer, but sounded largely optimistic about the US economy.
In reaction to the speech, the loonie rose amid greenback weakness, as markets questions the timing of the Fed rate hike.
"Shifting expectations for relative central bank policy have provided for recent CAD strength given Monday’s remarkable reaction to Fed Chair Yellen’s speech in which she failed to repeat her previously communicated call for a rate hike in the ‘coming months’," said Eric Theoret, currency strategist at Scotiabank.
Some economists have pointed out that a July rate hike is still a possibility if American employment figures recover and the UK votes to stay within the EU after the referendum.
"Coming in the wake of last Friday’s news of a sharp slowdown in employment growth in May, Yellen’s comments were surprisingly upbeat. Overall, we still think the Fed will raise rates twice this year, in July/September and December," said Paul Ashworth, chief North American economist at Capital Economics.
USD/CAD: Loonie Drops on Profit Taking & Weaker Oil
The Canadian dollar was easing on Thursday as traders took profits from the recent rally in the CAD. The USD/CAD pair was seen near daily highs, heading into the US session, and it was hovering around C$1.2740, gaining 0.40% on the day.
Oil was alsao easing on Thursday with traders taking profits after pushing the commodity to the best daily close of 2016. The WTI benchmark was trading 0.9% weaker on the day, slipping below the $51 mark. This undermined the Canadian dollar further.
The loonie might be further influenced by today's speech from Bank of Canada Governor Stephen Poloz, who is due to hold a press conference about the Financial System Review in Ottawa.
Loonie Trims Losses After BoC's FSR Release
The USD/CAD pair was up just 0.18% and traded at C$1.2717 on Thursday, after hitting an intraday high of C$1.2759.
Lower oil prices dragged down the resource-linked loonie, as futures for WTI, the standard for the US, fell 1.35% to $50.54 per barrel and the international benchmark Brent lost 1.12% and traded at $51.92 per barrel.
The decline came after WTI reached the highest price since October at $51.6 overnight and Brent hit the highest level since July. Losses were attributed to a stabilization in US oil production reported by the Energy Information Administration (EIA) and nervousness around the upcoming Federal Reserve (Fed) meeting next week.
In addition, the loonie was weighed down by the Bank of Canada's (BoC) Financial System Review (FSR), which said that rapidly rising home prices in the booming Toronto and Vancouver residential markets are not sustainable.
"This suggests that prospective homebuyers and their lenders should not extrapolate recent real estate performance into the future when contemplating a transaction," Poloz said in a statement.
The FSR noted that household debt levels have been rising, as consumers take on larger mortgages to purchase more expensive homes in areas like Toronto and Vancouver, where prices have skyrocketed in light of increased demand and low interest rates.
May 2016 Canadian employment change 13.8k vs 3.8k exp
Details form the May 2016 Canadian employment change and labour market data 10 June 2016
USD/CAD forecast for the week of June 13, 2016
The USD/CAD pair fell significantly during the course of the week, but did get a bit of a bounce on Friday as well markets pulled back. With this, will have to pay attention to how this market behaves, because it appears that the oil markets may soften up which could drive this pair higher. However, this is probably not going to be a market that’s going to be easy to trade off of longer-term charts, and as a result will more than likely be a short-term back and forth type of situation.
USD/CAD forecast for the week of June 20, 2016
The USD/CAD pair initially tried to rally during the course of the week, but found enough resistance above the 1.30 level to keep the market down and form a shooting star. That of course is a very negative sign, but there is a significant amount of support just below in order to keep the market somewhat afloat. With this being the case, it’s going to be very difficult to trade this market from the longer-term time frames at this point. Ultimately, short-term trades will probably be the way to go.
Canadian April wholesale trade sales +0.1% vs +0.5% exp
Canada April wholesale trade sales data
Weak on the headline but a touch stronger on the revision.
Those falling inventories are a drag on GDP.
Three of the seven sectors increased.
USD/CAD: Loonie Flat After Yellen's Testimony as Lower Oil Prices Weigh
The USD/CAD pair edged up 0.12% to C$1.2819 on Tuesday, after reaching an intraday high of C$1.2825.
The key event of the day was Federal Reserve (Fed) Chair Janet Yellen's testimony in front of the Senate Banking Committee.
Yellen stressed a cautious approach, stating that Brexit risks and a slowdown in US employment point to the need for patience before further monetary tightening.
"The pace of improvement in the labor market appears to have slowed more recently, suggesting that our cautious approach ... remains appropriate," Yellen said.
"Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress," she added.
After Yellen's comments, economists updated their projections to just one rate hike this year.
"Yellen's overall tone was similar to her post-FOMC remarks, though there was a slight dovish tilt given her expression of concerns about the uncertain outlook and persistent headwinds hitting the US economic recovery. In that regard, our base case continues to be for the Fed to deliver a single hike this year at the September FOMC meeting," said Millan Mulraine, deputy chief US macro strategist at TD Securities.