CAD: Canadian Dollar is moving slowly on Wednesday morning

The Canadian Dollar rate is traded with slight deviation at the Forex currency market on Wednesday morning, although oil prices are increasing today. Investors’ interest in risky assets is low at the moment, which affects trading. 

Forex forecast: MACD indicator is moving in the positive area for the pair USD/CAD, giving a buy signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.9830, the pair will go 0.9950 and 0.9970. If upward breakdown does not take place, the pair will aim to 0.9780.

CPI in Canada decreased by 0.7% m/m (+3.1% y/y) in June. This became a negative signal for the CAD. Earlier, the Bank of Canada left interest rate at the previous level of 1.0%, which agreed with the forecast. According to the follow-up comments of the regulator, certain monetary incentives can be phased out in the nearest future and current level of inflation, which is about 3.7%, is assessed as temporary. At the same time, global inflationary pressure is obviously growing.

The Bank of Canada believes that GDP of the country will account to 2.8% in 2011 (reduction by 0.1% versus forecast of April); and it will be: 2.6% in 2012 and 2.1% in 2013. According to the Bank evaluation, export performance in Canada is negative, because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation more complicated. The growth in the interest rate in Canada will directly depend on stability in the economic development. The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development. First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy.

In addition, trade deficit in Canada was at the level of -$1.6 billion in June against the level of -$1 billion in May. This is probably related to the problems in the neighboring U.S.

As it became known yesterday, number of begun construction in Canada increased to 205.1 thousand in July which is higher than the forecast at 194.5 thousand and above the previous level of 196.6 thousand. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth. 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 Q4 last year.