cad fundamentals

Canadian Dollar, Australian Dollar Up 1% On Record $25/bbl Gain in Crude Oil

Monday, 22 September 2008 22:30:36 GMT  |  Terri Belkas, Currency Strategist

The Canadian dollar and Australian dollar both rocketed over 1 percent higher against the greenback on Monday, propelled by a surge in commodities.

It was tough to avoid the headlines noting the $25/bbl jump in crude oil futures, as the move marked the biggest one-day gain in its exchange-traded history. While much of this had to do with the fact that expiry fell on Monday’s close for the benchmark contract, the price action was still significant. USD/CAD had some Canadian fundamental charge behind it as well, as retail sales rose for the fifth consecutive month in July, led by furniture, building supply, and pharmacy sales. However, the gains were not quite as high as expected, as the headline retail sales index rose 0.1 percent while sales excluding autos picked up 0.4 percent. Nevertheless, the data suggests that the Canadian economy has held up well in recent months - despite the US economic slowdown - as domestic demand supports growth. Looking ahead to Tuesday, Canadian CPI for the month of August is anticipated to rise to an annualized pace of 3.5 percent – a more than 5 year high – while the Bank of Canada’s core CPI may hold steady at 1.5 percent. However, there is potential for the headline reading to reflect softer inflation pressures given the broad decline in commodity prices during the survey period, and this surprise factor could weigh on the Canadian dollar. On the other hand, a weakening in the currency over the past few months could boost import price inflation, providing potential for a hot number. My technical bias for the commodity dollars (AUD, NZD, CAD) for Tuesday is bearish, as they have all run in to key resistance levels and I think we’re likely to see at least a slight pullback.

Related Article: Canadian CPI Forecast, Crude Oil Prices Surge While US Dollar Plummets - What's Next for the Dollar?


Check out Daily Fundamentals in its entirety for analysis and outlooks on the US dollar, euro, British pound, Japanese yen, and the commodity dollars.

Resources

• free demo account
• forex courses
• open an account
• forex stream
• free webinars