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At the Forex currency market the Canadian Dollar rate is weakening at the beginning of the week in response to market's hesitations that rally in high-yielding currencies will be continued.

Forex forecast: MACD indicator for the pair USD/CAD is going down in the negative area and is giving a sell signal. Stochastic Oscillator has come out of the over sold zone and is giving a buy signal.

Forex recommendations: in case of rebound from 1.0135, the pair will go to 1.0140 and 1.0150. 

Latest statistics showed that CPI in Canada fell by 0.6% m/m (+2.3% y/y) in December against the forecast of -0.1% m/m. Despite this obvious fact, the data requires some clarification. Annual growth of CPI has been minimal since February 2011, and inflation reduced due to decline in prices for gasoline and other fuel.

Therefore, basing on the current inflationary situation, the Bank of Canada can keep inflation at the existing level for some more time with no damage for its monetary policy.

At the same time, forecast of the Bank of Canada indicates that inflation will slow down up to +1.5% on annual basis in April-June.

We would remind that last week, the Bank of Canada left interest rate at the level of 1.0% per annum, which did not become a surprise for the market.

The data showed that sales increased by 0.2% in the manufacturing sector of Canada against expectations of 1.2%, the main driver of the growth was general rise in the sector and improvement in some of its sections: such as industrial equipment sector, for example. Number of new orders in the sector rose by 3.7% in November, stocks in the warehouses: by 0.4%.  

According to the updated estimates of the Bank of Canada, GDP in the country will amount to 3.1% in Q1, 2013; inflation will reduce to 1.5% in Q2 this year. At the same time, interest rate can go up during all 2013 in the moderate pace, while decline in mortgage rates will encourage boost in the volumes of lending to house holds.

Statistics demonstrated that sales of new cars in Canada reduced by 1.0% in November, to137.640 thousand, smoothing over the rise achieved over the few previous months. It became known earlier that house price index in Canada rose by 0.3%in November against the growth of 0.2% in October and expectations of the same level.

GDP in Canada rose by 3.5% y/y in Q3 against revised decline of 0.5% in April-June. Economists predicted growth of the index of 3%.

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