USDCAD news - page 29
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Canada Dec building permits +11.3% vs +6.2% expected Building permits fell 19.6% in Jan (revised to -19.9%) The bounce back shows that Canadian housing continues to muddle along.
On Friday, Canadian housing starts were released early and showed housing starts at 165.9K vs 187.5K expected. That included the largest drop in the oil-producing prairies housing construction market in 4 years.
CAD: All About Oil, And The US - Credit Agricole The lack of significant data releases makes oil the Canadian Dollar’s main player this week, with US oil inventory data (Wednesday) to note given the previous week’s surge.
But the US outlook is increasingly relevant in light of growing concerns over an economic slowdown, which points to less demand for Canadian exports.
Such fears, most recently ignited by the weak ISM non-manufacturing figures and dovish rhetoric from Dudley, have contributed to the broad USD selloff of late, lifting commodity currencies in particular.
In the near-term, delayed Fed and on-hold BoC limits the scope for widening rate differentials, keeping CAD supported at current levels.
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USD/CAD drops after U.S. data, Fed minutes ahead The U.S. dollar dropped against its Canadian counterpart on Wednesday, after the release of mixed U.S. economic reports and as investors remained cautious ahead of the minutes of the Federal Reserve’s latest policy meeting.
USD/CAD hit 1.3783 during early U.S. trade, the session low; the pair subsequently consolidated at 1.3797, declining 0.47%.
The pair was likely to find support at 1.3704, Tuesday’s low and resistance at 1.3967, the high of February 12.
The Federal Reserve said that industrial production increased by 0.9% last month, beating expectations for a gain of 0.4%. Industrial production fell by 0.7% in December, whose figure was revised down from a previously reported fall of 0.4%.
Earlier Wednesday, the U.S. Commerce Department said that housing starts fell 3.8% to hit 1.099 million units last month from December’s total of 1.143 million units. Analysts had expected a rise 2.5% to 1.170 million.
Meanwhile, the number of building permits issued declined 0.2% to 1.202 million units from 1.204 million. Economists had forecast a drop of 0.1% to 1.200 million units in January.
A separate report showed that U.S. producer prices inched up 0.1% last month, though the forecast was for a drop of 0.2% and after a 0.2% decline in December.
Year-over-year, the producer price index declined 0.2%, compared to expectations for a fall of 0.6%.
The core producer price index moved up by 0.4% in January, above forecasts for a gain of 0.1% and following a rise of 0.2% a month earlier.
Market participants were eyeing the minutes of the Fed’s February policy meeting due later in the day for hints on the timing of future interest rate hikes.
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USD/CAD forecast for the week of February 22, 2016 The USD/CAD pair went back and forth during the course of the, showing quite a bit of volatility. We believe that the 1.35 level below is still the support that the market will continue to pay attention to, but eventually we will more than likely break above the 1.40 level. It is at that point in time that we will start buying this market again as it should continue the uptrend towards the 1.45 handle given enough time. We have no interest whatsoever in shorting this market, at least not until we get well below the 1.35 handle.
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Good downward move!
USD/CAD Forecast Feb. 22-26 The Canadian dollar posted modest gains last week, as USD/CAD closed the week at 1.3845. This week has just two events on the calendar. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.
In the US, employment numbers improved, as Unemployment Claims dropped to 262 thousand. CPI and Core CPI edged above their estimates, reviving speculation about a March rate hike. Canadian numbers were mixed, as Manufacturing Production beat the forecast, while Core Retail Sales posted sharp decline and missed expectations.
Updates:
Canada Q4 current account deficit $15.38B vs $15.55B expected Fourth quarter current account data from StatsCan:
The deficit was slightly smaller than expected but there was a larger revision to the Q3 data.
Separately, the Canadian PPI report was released:
There is a danger that pass-through raw materials and import costs are going to restrain the Bank of Canada's ability to cut rates. You would expect them to look-through the declines due to the soft loonie and commodities but the inflation pressures may make them hesitate.
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Canada GDP Preview: Q4 to Disappoint With Flat Growth The final quarter of 2015 is expected to show no growth, as economic slack drags on and takes away the previous quarter's gains.
Markets expect Canada's real GDP is likely to have decelerated to 0.1% during the fourth quarter, which is very close to the economic stagnation the Bank of Canada (BoC) projects. Back in January, the central bank announced a massive downward revision to the fourth quarter GDP estimate to 0% during the final three months of 2015 with another major drop in oil prices affecting the resource-dependent economy.
"The commodity-producing sector has shrunk rapidly, significantly reducing investment and employment, and the effects of this process on the level of GDP are expected to peak roughly in mid-2016," the BoC wrote in the Monetary Policy Report in January.
Poor economic activity is bound to put pressure on the commodity-linked Canadian dollar or loonie as it is nicknamed by currency traders, before next week's interest rate announcement by the BoC.
Meanwhile, December's month-on-month GDP data is projected at 0.1%, after a 0.3% advance in November.
Fresh GDP figures will be released by Statistics Canada at 12:30pm GMT on Tuesday.
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Expecting 1.35 to be taken out.
Room For A Dovish BoC Surprise Next Week; Risk-Reward Favors Short CAD The Bank of Canada (BoC) held rates at 0.50% in January, despite expectations for an ease, preferring to see the details and impact of the coming fiscal stimulus before acting. Additionally, the sharp decline in the C$ into the meeting likely made them reticent to further exacerbate the price action with an ease.
With the budget to be released on March 22nd and Canadian data generally surprising on the upside since midJanuary, we see the BoC remaining on hold next week. With only 1bp of a cut priced in the OIS market, an on-hold, steady state outcome would likely elicit little market reaction. However, the substantial re-pricing of BoC expectations since end-January where the market is only pricing a 20% chance of a cut through September 2016 leaves asymmetric risks for the C$.
We certainly don’t expect the BoC to cut, but risks around the economy remain tilted to the downside, particularly amidst a weak global backdrop.
Indeed, despite the C$ significant depreciation, exports subtracted 0.2 pct points from Q4 GDP. The upside surprise in the print was largely driven by a collapse in imports, certainly not a positive forward-looking sign about capital investment and consumption. Additionally, the over 8% appreciation of the C$ off its mid-January lows could raise concerns about an unwanted tightening of financial conditions, particularly as the BoC has yet to see a rebalancing towards non-energy exports as it has long expected.
Therefore, risk/reward favors short CAD positions into the meeting. A dovish tone will challenge the optimistic OIS path, relative to the residual economic risks still facing an economy dealing with the oil shock.