USDCAD news - page 47
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
CAD: Canada's 'Current Problem': Where To Target?
Goods and services exports led the way for a slight improvement in Canada’s third quarter current account deficit. That said, after stripping out energy exports, which have rebounded sharply, there still doesn’t appear to be much momentum in trade.
Neither services nor non-energy goods exports are getting a noticeable lift from CAD’s weakness. So, while the recent pickup in oil prices might see the loonie gain some ground in the nearterm, the economy still requires a weak exchange rate to support the absent recovery in non-energy exports.
That should keep the BoC on the dovish side and leave the loonie trading around 1.39 by the end of Q1.
CAD: Some Good News For CAD Ahead Of This Week's BoC
The two key events over the past week have played out favourably for the CAD.
Firstly, OPEC agreed to cut output to 32.5mbd which boosted oil prices. Secondly, Q3 GDP report came in above the BoC’s October projection at 3.5% QoQ annualized thanks to a strong rebound in exports. We believe this number will bring some relief to Canadian policymakers who have been frustrated with slow growth and were forced to revise down their macroeconomic forecasts in the most recent Monetary Policy Report.
The latest data should allow the BoC to keep its current message largely intact next Wednesday and re-iterate that the risks to the inflation outlook are “roughly balanced” although probably still “in a context of heightened uncertainty”. The outcome of the US election has probably added to that uncertainty. With NAFTA countries accounting for 78% of Canadian exports, rising protectionism and the threat to dismantle the agreement by the US President-elect should be of concern to Canada. However, the positives are also apparent, namely more hawkish Fed expectations that are keeping the USD strong and the CAD weak, and a potential improvement in the US growth outlook that is likely to have some positive spillovers to the Canadian economy.
Ultimately we believe that rate differentials will keep the USD/CAD close to 1.35 into year-end, while we don’t expect oil prices will be much of a tailwind to the Canadian dollar as WTI struggles to rise significantly above USD50/bl in the near term.
source
Canada Oct international merchandise trade balance -1.13B vs -1.70B expected
Trade balance data from Canada for October
October 2016 Canadian building permits 8.7% vs -0.7% exp
October 2016 Canadian building permits
CAD: 3 Reasons To Add Short Exposure Around Current Levels
1) Oil is at the top of its range. Crude prices have gained in the aftermath of the November 30 OPEC deal, with front-month WTI prices above USD 50/bbl. Our commodity strategists believe current levels are unlikely to be sustained as WTI levels above USD 50/bbl will invite North American producer hedging and production, which will threaten needed market rebalancing and inventory reduction. We continue to forecast a retreat towards USD 45/bbl in the weeks ahead, which would be consistent with a higher level of USDCAD.
2) Rate differentials. The Bank of Canada has signalled its policy outlook is set to diverge further from that of the Fed. Our economists expect an easing in January, but even steady Bank of Canada policy would allow front-end rate differentials to continue to move against the CAD.
3) Positioning. Our BNP Paribas positioning framework signals the market has turned long the CAD for the first time since Q2 2016. Long CAD positions could be vulnerable to a retreat in crude prices and/or a turn for the worse in the risk environment as markets shift to focus on US fiscal policy implementation risks and trade policy uncertainties.
USD/CAD Forecast - The US Dollar To Canadian Dollar Exchange Rate Vulnerable To FED Policy & Oil Prices
The US Fed’s policy and crude oil prices will dictate the movement of the USD/CAD exchange rate next week
The Bank of Canada kept rates unchanged, however, the downbeat commentary suggests that the risks to the rates are skewed towards easing.
The bank acknowledged that the global economic conditions had strengthened since the bank’s last monetary review in October, but “uncertainty, which has been undermining business confidence and dampening investment in Canada’s major trading partners, remains undiminished,” said the MPC.
The bank also highlighted the divergence between the two neighbouring economies. “There have been ongoing gains in employment, but a significant amount of economic slack remains in Canada, in contrast to the United States,” the MPC said in the statement.
A few analysts’ considered the MPC statement as dovish, which points to a rate cut in 2017.
“We would interpret the series of relatively downbeat statements as a stark reminder that Canadian short-term rates in no way, shape or form, will follow the U.S. lead higher,” Bank of Montreal chief economist Doug Porter said in a note. “Barring some massive shock, the bank appears to be
read more
USD/CAD Consolidates Near Critical Support Confluence
Following a gap lower at this week’s open, USD/CAD has fallen into a range. The pair trades near an important support confluence that can impact the medium-term directional bias in the pair. The sharp rise in oil prices in the early week has not impacted the exchange rate as much as would be expected considering the long withstanding correlation between the two instruments. While the range has narrowed in the pair today, volatility is expected to increase on Wednesday as the Federal Reserve is expected to make a highly anticipated interest rate hike announcement.
After initial gains in oil prices at the open this week, the rally in WTI crude oil has subsided. Crude oil prices were lifted on the back of a collaboration with non-OPEC oil producers to limit output that was reached over the weekend. WTI crude oil (USOIL) opened above important resistance at $51.50 referencing prior 2016 highs but struggled at the next level of resistance found at $53.94. The level marks prior resistance from the first quarter of 2015 and carries confluence with a 76.4% Fibonacci level measured from 2015 highs to 2016 lows. While there has been an advance in oil prices today, volatility has slowed in the financial markets ahead of the Fed meeting and gains have been marginal.
The US Dollar index (DXY) is seen bouncing from a bearish flag pattern that had previously contained price action from the November 24 peak. A bullish break had materialized on Friday and the decline on Monday was met with buyers on a retest of the pattern. A consolidation has formed for most of the day slightly above the lower line of the flag pattern.
The Federal Reserve is expected to raise rates on Wednesday. The move is already priced in by the markets and the focus will be on forward guidance. The Fed may look to take a cautious approach following the US elections and wait for further developments to Donald Trumps expected fiscal stimulus package prior to revising 2017 forecasts.
Canada Teranet/National Bank house price index Nov 198.82 vs 198.35 prev
Canadian November Teranet/National Bank house price index 14 Dec
USD/CAD Trims Early December Losses In A Two-Day Recovery
USD/CAD has moved sharply higher following Wednesday’s Fed meeting and has erased a bulk of the losses seen in the first half of December. The pair reached a high of 1.3416 today, to erase about 90% of early month losses, prior to pulling back. There has been a late-day retreat in the pair as the Dollar pulled back and oil prices recovered into positive territory for the day. A bearish shooting star candlestick print on a 4-hour chart will open up the potential for a correction from current levels, but dips are expected to be met with buyer’s as the Fed-inspired rally carries strong momentum behind it.
Oil prices have been volatile this week as an agreement between non-OPEC oil producers over the weekend to limit output had precipitated a gap above major 2016 resistance in WTI crude oil (USOIL). Wednesday’s Fed meeting has provoked broad-based strength in the Greenback and has served to take oil prices back into negative territory for the week and back below 2016 resistance found at $51.50. There was some continued selling pressure in the early day, but a steady recovery in North American trading has brought USOIL back into positive territory for the day. Wednesday’s decline has led to a bearish evening star print on a daily chart. While the candlestick pattern often signals a turn in trend, momentum has remained strong in the recent rally from mid-November lows. Bulls will want to see a breach back above the $51.50 price point to signal that the bullish trend remains intact.
The US Dollar index (DXY) extended higher today to trade at fresh 13-year highs. The index has gained steadily since the Fed meeting but resistance at 103.54 has resulted in a slight retreat. The level marks a spike low from July 2002, as seen on a monthly chart. Despite the pullback, the Greenback has outperformed all of its major counterparts for a second consecutive day.
read more
October Canadian Capital Inflows Strengthen To C$15.8 Billion
Overseas investment into Canadian securities increased to C$15,8bn for October from C$11.8bn in September. This was higher than the expected figure of C$12.3bn and the strongest inflow for seven months.
For the first 10 months of 2016, total inflows increased to C$139.2bn from C$100.8bn the previous year.
There was a decline in bond inflows for the month with a sharp decline in corporate bond inflows partially offset by net inflows into government bonds.
There was a sharp reversal in money-market flows to show a substantial inflow for the month of C$7.7bn after an outflow of C$5.4bn for September. These inflows were mainly concentrated in private corporate bonds.
Equity inflows declined on the month, but still recorded a strong net inflow of C$38.2bn for the first 10 months of the year from C$8.7bn previously.
There was a small increase in Canadian securities flows overseas to C$2.2bn from C$1.8bn in September, although the 10-month total of C$15.2bn was still below the C$26.4bn seen in the first 10 months of 2015.
The data overall will maintain optimism over the strength of short-term capital inflows and will provide a strong foundation for the balance of payments position with inflows comfortably offsetting the current account deficit. The strength of net flows should provide net currency support.
read more