CAD: Canadian Dollar gives way to his American colleague

At the Forex currency market the Canadian Dollar rate goes down on Friday after previous rise caused by the American statistics.

Forex forecast: MACD indicator in moving in the positive area for the pair USD/CAD; however it goes down, giving a pair sell signal. Stochastic Oscillator is reversing in the neutral zone, giving a pair buyl signal.Forex recommendations: off the market.

Feasible event scenario: in case of breakdown at the level of 0.9750, the pair will go to 0.9770 and 0.9790. If the level of 0.9720 is exceeded, traders’ target will be the level of 0.9680.

As it became known yesterday, trade balance in Canada amounted to -CAD 0.92 billion in April; index of prices for new houses rose by 0.3% m/m in April against the forecast of +0.1% m/m. 

Meanwhile CAD received support from the mixed U.S. statistics yesterday.

Inflation in Canada increased by 3.3% y/y, 0.3% m/m in April against the forecast of 3.4% y/y and 0.5% m/m; while energy costs rose by 17.1% y/y, as per the estimates of the Canadian Statistics Service.

The Bank of Canada stated earlier that CPI in the country will begin to rise, as soon as it exceeds expected level. At the same time value of key index of net CPI is also growing.It became known earlier that balance of current account in Canada was at the level of –CAD $8.92   billion in QI against the level of CAD$10.28 billion in QIV last year. In addition, real GDP of basic prices increased by 0.3% (+2.8% y/y) in QI against revised level of -0.1 % m/m in February.

At the beginning of June the Bank of Canada left the interest rate unchanged at the level of 1.00% per annum which agreed with market expectations. The regulator said in the follow-up comments that minimization in incentives shall be thoroughly considered, although eventually all the incentives will be phased out. According to the Bank of Canada, core inflation remains relatively low and economy is active, as expected. At the same time expensive Canadian Dollar may well become a break on national economic growth and provide a restraining influence on inflation.
Note: GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.

 

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