CAD: Canadian Dollar started to rehabilitate
The Canadian Dollar rate became weak at the Forex currency market lately along with the interest to risk; however the CAD has demonstrated attempts to recover.
Forex forecast: MACD indicator is moving in the negative area for the pair USD/CAD and is going up, giving a buy signal. Stochastic Oscillator tends to come out of the oversold zone earlier and started to go down, giving a sell signal.
Forex recommendations: in case of breakdown at the level of 0.9770, the pair will go to 0.9750 and 0.97300. If downward breakdown does not take place, the pair will consolidate near the current level.
It became known yesterday that number of begun construction in Canada increased to 205.1 thousand in July, which had been above of forecast of 194.5 thousand and previous value of the indicator at 196.6 thousand.
Statistics released earlier showed that Canadian economy had demonstrated the most significant decline over two years in May: growth of GDP in Canada decreased by 0.3% m/m (C$1.26 trillion) in May against zero changes in April and +0.3% of growth in March. Slowdown this time was caused by decrease of production in the leading economic sectors: oil and gas industry and mining sector. It is clear that some negative factor should be attributed to the developments in the U.S, which is the largest trading partner of Canada.
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. 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.
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.
Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.
CPI in Canada decreased by 0.7% m/m (+3.1% y/y) in June. This became a negative signal for the CAD.
