CAD: Canadian Dollar continues to grow

At the Forex currency market the Canadian Dollar rate continues to grow in the middle of the week. High oil prices and general positive sentiments in the market provide support to the currency.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and continues to go down, volumes are decreasing. Stochastic Oscillator is in the neutral zone and is returning to the overbought zone, indicating that sales will prevail.

Forex recommendations: in case of breakdown at the level of 1.0070, the pair will go to 1.0060 and 1.0050.

It became known yesterday that the Canadian regulator left interest rate unchanged at the level of 1% per annum. The news did not become a surprise for the players, as investors had assumed that interest rate would be kept at the current levels for a least another 12 months.

In the follow-up comments the Bank of Canada said that the impact of recession in the global economy can be projected onto the Canadian economic system and that through the fault of Eurozone conditions at the global financial platforms have deteriorated sharply.

According to observers from the agency Standard & Poor's, economy of Canada is in the favourable position now, since exports grow, despite strengthening of the CAD and consumer spending remains at the high levels.

Unemployment rate in Canada increased by 0.1% in November, up to 7.4%, while the number of employees reduced by 18 thousand. Moreover, share of labour force decreased by 0.1%, to 66.6% last month. GDP in Canada rose by 3.5% y/y in Q3 against the revised decline of 0.5% in April-June. Economists predicted growth of 3%. The Bank of Canada believes that country’s GDP will amount to 2.8% in 2011 (decline by 0.1% against the forecast in April), in 2012 it will be: 2.6% and in 2013: 2.1%.  According to the Bank, export performance in Canada is weak, because low demand in the U.S. impedes progress in the index and expensive CAD also offers a challenge. The rise in the interest rate in Canada will directly depend on stability in economic growth.

Canadian monetary politician Mr. Flaherty noted last week that situation in the world economy will not change until Europe allocates more resources to fight against crisis. He shares the point of view of German politicians and IMF that lost time will cost expensive price to Eurozone.

CPI rose by 0.2% (+2.9% y/y) in October against the forecast of growth of 0.1% (+2.7% y/y). The indicator happened to be lower than the previous level of 3.1% y/y, however, it is still within the range of 1-3% specified by the Bank of Canada. Last month, prices in Canada increased mostly for gasoline and food.