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CAD: Canadian Dollar is being corrected on Monday

At the Forex currency market on Monday the Canadian Dollar rate tends to correction, although external background can interfere with the alignment of forces for the pair USD/CAD.

Forex forecast: MACD indicator is in the negative area for the pair USD/CAD; however it is growing steadily, giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: if current market signals will be maintained and in case of breakdown at the level of 1.0010 the pair will go to 1.0050 and 1.0075.

Finance Minister of Canada, Mr. Flaherty said last Friday that Canada will continue to leave market to perform the function of building up currency value. He believes that market that knows actual price of the currency better.

Earlier, the head of the Bank of Canada Mr. Carney noted that some Central Banks stay below inflation curve, although in Canada, inflation levels are moderate. At the same time Carney emphasized that economy and trade deteriorate in the country due to the rise in the rate of the CAD.

Flaherty, however stressed that monetary politicians have a package of measures which will be applied if the situation with CAD at the currency market will go beyond the control or violation of trading will be noticed. Earlier, the head of the Bank of Canada Mr. Carney noted that some Central Banks stay below inflation curve, although in Canada, inflation levels are moderate. At the same time Carney emphasized that economy and trade deteriorate in the country due to the rise in the rate of the CAD.

A week earlier meeting of Bank of Canada was held where the regulator decided to keep interest rate unchanged, at the level of 1%. Given the non-uniform statistical data on the nearest neighboring country, the USA, a step is perfectly logical.

According to the experts from the International Monetary Fund, Canadian economy will grow by 2.3% y/y in the current year; this was a downgrade compared with the forecast of October (+2.7% y/y).

At the same time IMF expects that in 2012 Canadian economy will increase by 2.7%. The exact figures of the GDP growth in the country will be published on 28 February but meanwhile IMF supposes that the indicator will be at the level of 2.9% (earlier – 3%).

As for the exchange rate of the Canadian Dollar in the current year, IMF believes that if average prices for the oil will be maintained at about 90 dollars for the barrel (in October- $79 per barrel), the CAD will consolidate with the help of fundamental support provided by the raw material economy of the country.
 

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