Forex Blog
Blog-FX.Com

The Canadian Dollar rate is traded upward at the Forex currency market on Monday morning, since the main driver of the currency, oil is also increasing in price at the beginning of the week, due to the fact that the issue of the U.S. budget deficit reduction has been partly resolved.

Forex forecast: MACD indicator is moving in the negative area for the pair USD/CAD and is moving along the signal line, not giving any signals. Stochastic Oscillator has come out of the oversold zone earlier and is going down at the moment, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.9500, the pair will go to 0.9480 and 0.94600. If downward breakdown does not take place, the pair will consolidate near the current level.

Statistics released last Friday showed that in May Canadian economy has demonstrated the most significant decline over two years– growth of GDP in Canada decreased by 0.3% m/m (C$1.26 trillion) in May against zero changes in April and +0.3% of growth in March.

Slowdown this time was caused by decrease of production in the leading economic sectors: oil and gas industry and mining sector.

It is clear that some negative factor should be attributed to the developments in the U.S, which is the largest trading partner of Canada.

CPI in Canada decreased by 0.7% m/m (+3.1% y/y) in June. It became a negative signal for the CAD.

Balance of current account in Canada was at the level of –CAD $8.92   billion in QI against the level of CAD$10.28 billion in Q4 last year. In addition, real GDP of basic prices increased by 0.3% (+2.8% y/y) in QI against revised level of -0.1 % m/m in February.

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.

Tags: