We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Join analyst @DavidJSong at 5:30 PM ET/10:30 PM GMT for your weekly update on key news trading events. Register here: https://t.co/gBlrRpCc55 https://t.co/2B8CdSgkuq
  • The Aussie sell-off halted at key lateral support this week and puts the focus on a break of this key range. Here are the levels that matter on the AUD/USD weekly chart. Get your $AUDUSD technical analysis from @MBForex here: https://t.co/rU4u1tMlmz https://t.co/QbyxUrDq1a
  • The $JPY market faces a clear disconnect between domestic economic data and monetary policy. What if that were to change? Get your market update from @DavidCottleFX here:https://t.co/4Gr8tLaHvj https://t.co/0eXMv5CTnd
  • #Forex Forecast via @DailyFX: US Dollar Technical Outlook on $DXY, $AUDUSD, $USDCAD, $USDJPY & $EURUSD Full Analysis ⬇️ https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/11/17/usd-price-us-dollar-chart-forecast-dxy-audusd-usdcad-usdjpy-eurusd.html
  • Further escalation in Hong Kong will likely bode poorly for risk appetite https://t.co/0NjUd3ahBu
  • How should you trade around event risks and what steps can you take to improve your trading psychology? Find out from @JoelKruger, a trading consultant and mentor. Only on Global Markets Decoded. Missed the episode? Read up here:https://t.co/JWIGJk4vKa https://t.co/WB39x4GP99
  • Poll - Does your personality match your #tradingstyle? Vote and find out from @WVenketas here: https://t.co/vREsUIWSJd https://t.co/Ft0ExAmMpq
  • #Dow Jones hits record high, however, central bank liquidity prompts volatility implosion. #FTSE 100 among underperformers with focus remaining on politics. Get your #equities market update from @JMcQueenFX here: https://t.co/EOFleGSeBp https://t.co/ecAyfSUeAM
  • RT @C_Barraud: 🇪🇺 #ECB’s Muller Says More Assets Could Join Stimulus List in Slump - Bloomberg https://t.co/roGEgu0VTQ
  • With increasing volatility in weather patterns, how might storms, hurricanes and floods rattle the supply chain for petroleum-based products and impact crude oil prices? Find out from @JStanleyFX here:https://t.co/O4dgBl47fq https://t.co/OQYqZAYt9S
Forex Analysis: Canadian Dollar At Risk For Further Losses On Slowing Inflation

Forex Analysis: Canadian Dollar At Risk For Further Losses On Slowing Inflation

2012-11-17 06:12:00
David Song, Currency Strategist
Share:
Canadian_Dollar_At_Risk_For_Further_Losses_On_Slowing_Inflation_body_Picture_1.png, Forex Analysis: Canadian Dollar At Risk For Further Losses On Slowing Inflation

Fundamental Forecast for Canadian Dollar: Neutral

The Canadian dollar weakened against its U.S. counterpart, with the USD/CAD pushing back above parity, and the Loonie may face additional headwinds in the week ahead as the economic docket dampens market expectations for higher borrowing costs. Although Canada retail sales are projected to increase another 0.5% in September, the consumer price report may dampen the Bank of Canada’s (BoC) scope to normalize monetary policy as price pressures diminish.

As the headline and core reading for consumer prices are expected to slow in October, BoC Deputy Governor Agathe Cote anticipates inflation to hold below the 2% target until the end of 2013, and we may see the central bank continue to endorse a neutral policy stance over the near to medium-term as the fundamental outlook for the region remains clouded with high uncertainty. After pushing back plans to balance the federal budget, Finance Minister Jim Flaherty held a cautious outlook for the region amid the ‘economic shocks that ripple outwards from other nations,’ and warned that Canada ‘is not immune to global forces’ amid the tepid recovery in the United States – Canada’s largest trading partner.

Given the historical ties between the two economies, BoC Governor Mark Carney many not want to get too ahead of the Federal Reserve as Chairman Ben Bernanke keeps the door open to conduct more quantitative easing, and we should see Mr. Carney preserve the 1.00% benchmark interest rate for most of 2013 in an effort to encourage a sustainable recovery. According to Credit Suisse overnight index swaps, market participants see the BoC keeping borrowing costs on hold over the next 12-months, and easing bets for a rate hike may continue to dampen the appeal of the Loonie as investors weigh the prospects for future policy.

As the rebound from 0.9632 gathers pace, the USD/CAD appears to be carving out an bullish trend, and we may see the pair continue to retrace the decline from June as the developments coming out of Canada curb bets for a rate hike. However, as the relative strength index on the USD/CAD remains capped by the 67 figure, the divergence in the oscillator certainly foreshadows a short-term correction in the index, and the pair may track sideways during the holiday trade before we see another bullish move in the exchange. - DS

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.