CAD: Canadian Dollar retreats at the end of the week

The Canadian Dollar rate goes down at the Forex currency market at the end of the week despite stability in the domestic economy, investors do not dare purchasing due to the obscure external background.

Forex forecast: MACD indicator is below its signal line for the pair USD/CAD today however it goes up giving grounds for a pair buy signal. Stochastic Oscillator is giving a similar signal.

Forex recommendations: if current external background is maintained at the same level, buyers’ targets on Friday will become the levels of 1.0170 and 1.0210.

Interest rate in Canada is at the level of 1% per annum. The last increase took place in September this year (+25 basis points). There is an opinion at the market that the Bank of Canada will not change the interest rate until QII next year, as economic recovery rate slows down in the country. The rate was increased 3 times in a row this year and at the last meeting of 19 October the regulator decided not to change it again.

Close proximity to the USA with QE2 is unlikely to bring positive factor to Canada. Therefore it is too early to speak about the rate growth. It is possible that while policy of easing is being conducted in America, Canadian rate will remain unchanged. The head of the Bank of Canada Mr. Carney noted earlier that economy needs regulation system reforms, as the risk of collapse of the financial institutions “which are too large to become bankrupt”’ is still too high at the moment.

He also stressed that the banks themselves should comply with market discipline and currencies’ rates should reflect the fundamentals. According to Carney increasing tension at the currency market bears risks for Canada itself.

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