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At the Forex currency market the Canadian Dollar rate started to slide away from three-week highs as soon as the USD started to gain strength.

Forex forecast: MACD indicator is moving up in the positive area for the pair USD/CAD, however it is going down, giving a sell signal. Stochastic Oscillator has pushes away from the oversold zone and started to go up in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9790, the pair will go 0.9820 and 0.9850. If upward breakdown does not take place, the pair will stay at the current levels.

Statistics released earlier prevented growth of the CAD: prices for industrial goods remain at the level of -0.3% in July, the same as a month earlier; prices for raw materials fell by 1.2% against previous expectations of decline by 2.5%.

The situation became harder due to the data on trade balance: the index amounted to -$15.33 billion in Q2 against expectations of -$13.8 billion.

Net CPI in Canada increased by 0.2% m/m (+1.6% y/y) in July. The indicator fell by 0.7% m/m (+3.1% y/y) in June.

As it became known, number of begun construction in Canada increased to 205.1 thousand in July which is higher than the forecast at 194.5 thousand and above the previous level of 196.6 thousand. In addition, trade deficit in Canada was at the level of -$1.6 billion in June against the level of -$1 billion in May. This is probably related to the problems in the neighboring U.S.

Earlier, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast. According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the nearest future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); and it will be: 2.6% in 2012 and 2.1% in 2013. According to the Bank evaluation, export performance in Canada is negative, because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation more complicated. The growth in the interest rate in Canada will directly depend on stability in the economic development. The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

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