CAD: Canadian Dollar is upward at the end of the week

At the Forex currency market the Canadian Dollar rate is moving upward on Friday, as investors’ sentiment is favourable for the risky assets. Activity in the pair is low.

Forex forecast: MACD indicator for the pair USD/CAD is in the positive area and is moving along the signal line, not giving a clear signal while volumes are average.  Stochastic Oscillator remains in the overbought zone, and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0130, the pair will go to 1.0120 and 1.0100.

This afternoon investors will wait for the information on employment rates in October (expected growth is 17.5 thousand), as well as unemployment rates in October (forecast is 7.3%, unchanged).

It became known earlier that GDP in Canada increased by 3.5% y/y in Q3 against revised decline of 0.5% in April-June. Economists predicted growth of the indicator by 3%.

Worth noting statistics of the week is that prices for industrial goods reduced by 0.1% m/m in October while growth of 0.1% had been expected. Raw material prices fell by 1.2% m/m in October against the forecast of +1.0%.

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.

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.

Earlier the head of the Bank of Canada Mr. Carney said that the regulator will maintain the rate at the level of 1% due to the influence of European developments. He believes that situation with European debt has deteriorated prospects of the global economy and spread panic in the financial markets. Taking into account the foregoing it is obvious that the program of providing help to the banks will be continued. The bank of Canada along with other largest world’s banks supported the idea of the U.S. FR to lower swop interest rates which will enable to increase liquidity of the USD at the market and stabilize monetary situation. Canadian monetary politician Mr. Flaherty noted this week that situation in the world economy would not change until Europe allocates more resources to fight against crisis. He shares point of view of German politicians and IMF that lost time will cost expensive price to Eurozone.