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At the Forex currency market the Canadian Dollar rate continues ascending trend which started yesterday, amid market's interest to risky assets.

Forex forecast: MACD indicator for the pair USD/CAD is in the negative area, it is moving along the signal line, while volumes are average, and is not giving a clear signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: case of breakdown at 0.9930, the pair will go to 0.9920 and 0.9900.

Situation in the market is favourable for the CAD: on the one hand oil prices have been regaining after the slight decline; on the other hand, market demonstrates interest in risky assets after declaration of China about willingness to help Europe resolve crisis problem.

In addition, the CAD receives support outside from the market: this winter was really cold in Europe which increased demand for energy supply.

The data released earlier showed that real GDP in Canada fell by0.1% m/m (+2.0% y/y) in November against expectations of growth of 0.2% m/m.

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 in the moderate pace during all the year of 2013, while decline in mortgage rates will encourage boost in the volumes of lending to households. We would remind that, in the middle of January, the Bank of Canada left interest rate at the level of 1.0% per annum, which did not become a surprise for the market.

Statistics released earlier showed that leading indicators index in Canada rose by 0.8%m/m in December against the forecast of +0.6% m/m. 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, according to the forecast of the Bank of Canada, inflation will slow down to +1.5% on annual basis in April-June.

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