CAD: Canadian Dollar still retreats

At the Forex currency market the Canadian Dollar rate weakens on Thursday, while external background remains tense and oil prices are still close to four-month lows.  

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD; and is moving along the signal line, not giving any signals. Stochastic Oscillator is going up in the neutral zone, shaping a buy signal.

Forex recommendations: in case of breakdown at the level of 0.9810, the pair will go to 0.9830 ? 0.9850. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Yesterday, Canadian Minister of Finance Mr. Flaherty said that global economic growth depends on the U.S. financial decisions, as it is still unstable and the situation in Europe confirms once again that there are still a lot of pitfalls in the economy.
Flaherty also stressed that Canada increased its competitiveness after the recession.

Otherwise the situation in the Canadian economy is stable.

Inflation in Canada increased by 3.3% y/y, and 0.3% m/m in April against the forecast of 3.4% y/y and 0.5% m/m; while energy costs rose by 17.1% y/y, as per the estimates of the Canadian Statistics Service.

The Bank of Canada stated earlier that CPI in the country will begin to rise, as soon as it exceeds expected level. At the same time value of key index of net CPI is also growing.It became known earlier that 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 QIV 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.

At the beginning of June the Bank of Canada left the interest rate unchanged at the level of 1.00% per annum which agreed with market expectations. The regulator said in the follow-up comments that minimization in incentives shall be thoroughly considered, although eventually all the incentives will be phased out. According to the Bank of Canada, core inflation remains relatively low and economy is active, as expected. At the same time expensive Canadian Dollar may well become a break on national economic growth and provide a restraining effect on inflation.

Note: GDP increased by 1.0% on quarterly basis (+3.9% y/y) in QI against the rise of 0.8% a quarter earlier.

 

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