CAD: Canadian Dollar started this week with strengthening

The Canadian Dollar rate is traded upward at the Forex currency market at the beginning of the week using oil prices and stable external background as a support.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and goes up steadily, while volumes are above average. Stochastic Oscillator went down to the oversold zone, and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0320, the pair will go 1.0305 and 1.0280. If downward breakdown does not take place, the pair will remain at the current levels.

Meanwhile, judging by the frame of traders’ mind the Canadian Dollar has growth potential. It became known last week that unemployment rate in the country decreased by 60.9 thousand. At the same time employment rate in the country increased by 60.9 thousand. For the Canadian economy that is closely linked with the economy of the USA it is a significant step forward which has supported the CAD so far.

The data released earlier showed that unemployment rate in Canada increased to 7.3% in August against the forecast of 7.2% and previous level of 7.2%. In addition, In addition, labor productivity fell by 0.9% on quarterly basis in Q2 against the forecast of decline by 0.7% q/q. It also became known that number of begun construction in Canada fell to 184.7 thousand in August against the forecast at 200 thousand. It is clearly obvious at the moment, that slowdown in the key indicators was caused by the state of the global economy and proximity to the Unites States.

The Bank of Canada believes that GDP of the country will amount to about 2.8% in 2011 (reduction by 0.1% versus forecast of April); in 2012 it will be 2.6% and 2.1% in 2013. According to the evaluation of the Bank, exports performance in Canada is negative because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation even more complicated. The growth in the interest rate in Canada will directly depend on stability in 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. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.

By the way, CPI in Canada rose by 0.3% m/m (+3.1% y/y) in August.