USDCAD news - page 6

Canadian Inflation Slowed More Than Forecast to 2.0% on Gasoline

Canada’s inflation rate slowed more than economists forecast in November, returning to the central bank’s target on a drop in gasoline prices.

The consumer price index rose 2.0 percent from a year ago following the October pace of 2.4 percent, Statistics Canada said today from Ottawa. The core rate, which excludes eight volatile products including fruit, vegetables and gasoline, slowed to 2.1 percent following the October pace of 2.3 percent, which was the fastest in almost three years.

Economists forecast the total rate would rise 2.2 percent and core by 2.4 percent, according to median responses in separate Bloomberg News surveys.

Bank of Canada Governor Stephen Poloz has said inflation will slow to a 1.4 percent pace in the second quarter of next year, ending a period of faster-than-expected gains linked to temporary factors such as a weaker currency and jumps in a few products including fresh meat. Policy makers have kept the benchmark overnight lending rate at 1 percent for more than four years and economists surveyed by Bloomberg predict Poloz won’t tighten for another year.

Gasoline prices fell 5.9 percent in November from 12 months earlier, following an October gain of 0.6 percent, Statistics Canada said today. Electricity price gains slowed to 3.6 percent from 5.6 percent.

On a monthly basis, total inflation fell 0.4 percent in November and the core rate fell 0.2 percent. Economists surveyed by Bloomberg predicted that overall monthly prices would fall 0.2 percent and the core rate would rise 0.1 percent.

Seasonally adjusted inflation declined 0.2 percent in November and the adjusted index of core prices was unchanged.

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USD/CAD Weekly Fundamental Analysis, December 23-26

The USD/CAD gained 25 points to trade at 1.1604 as the dollar continues to gain momentum. Canada’s dollar approached a five-year low after a report showed inflation slowed more than forecast in November, adding to speculation slumping crude-oil prices will damp economic growth and keep interest rates low for longer.

The currency fell for a fourth week as crude, the nation’s biggest export, traded at almost the lowest since 2009. Canadian two-year government bonds’ yield advantage over U.S. peers shrank to the least since 2010 as traders priced in a rate increase by the Federal Reserve in the first half of 2015 and began to push chances for Bank of Canada rate action into 2016.

Canada’s consumer price index rose 2 percent from a year earlier following the October pace of 2.4 percent, the nation’s statistics agency said today from Ottawa. Economists surveyed by Bloomberg forecast the index would increase 2.2 percent.

Canadian retail sales were little changed in October at C$42.8 billion ($36.9 billion), Statistics Canada said in another report. A Bloomberg survey of economists forecast a 0.3 percent decrease.

Ontario, Canada’s most populous province, had its credit rating downgraded to AA- from AA by Fitch Ratings. The company cited the difficult actions needed to meet the province’s goal for a balanced budget by 2017-18.

Canada Dollar Trades at Almost 5-Year Low as U.S. Economy Surges

The Canadian dollar traded at almost a five-year low after a report showed the economy of the U.S., the nation’s biggest trade partner, surged the most in a decade in the third quarter, outpacing gains in Canada.

The loonie, as the Canadian dollar is known, fluctuated amid a rally in crude oil, the nation’s biggest export. The currency weakened earlier even after a report showed Canada’s gross domestic product grew 0.3 percent in October from a month earlier, more than forecast. The annualized 5 percent climb in U.S. GDP added to speculation the Federal Reserve will raise interest rates before the Bank of Canada.

“It really shows the U.S. diverging from other developed economies, like Europe and Canada,” Matt Weller, an analyst at Gain Capital Holdings Inc.’s Forex.com in Grand Rapids, Michigan, said by phone. “It’s showing that the U.S. is pulling ahead of the pack.”

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, depreciated as much as 0.3 percent to C$1.1667 per dollar before trading little changed at C$1.1630 at 4:07 p.m. in Toronto. It reached C$1.1674 on Dec. 15, the weakest level since July 2009. One loonie buys 85.99 U.S. cents.

The Bloomberg Dollar Spot Index, which tracks the greenback against the currencies of 10 U.S. trading partners including Canada, rose as much as 0.5 percent to 1,133.12, headed for the highest close since March 2009.

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USD/CAD forecast for the week of December 29, 2014

The USD/CAD pair broke higher during the course of the week, but struggled above the 1.16 region in order to pull back and form a shooting star. Because of that, we feel that this market may drop in the short-term, but it will only be an opportunity to start buying again as we pick up momentum to go higher. Ultimately, we feel that this market will continue to go higher, but we may have to step aside for little bit in order for the momentum to pick back up again.

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USD/CAD forecast for the week of January 5, 2015

The USD/CAD pair fell initially during the week, but then shot higher in order to break out. We closed towards the top of the range, and it now appears that we are heading to the 1.18 handle in very short order. Pullbacks at this point time offer buying opportunities just as they always have, as the US dollar is without a doubt the favored currency around the world. We believe that there is essentially a “floor” in this market at the 1.12 level. We have no interest in selling at the moment.

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Canada's Industrial Prices Drop as Raw Materials Suffer in Nov

Industrial products' prices were seen lower in November as raw material costs decreased.

Canada's Industrial Product Price Index (IPPI) edged down 0.4%, after falling 0.5% in October, Statistics Canada reported on Tuesday. Fresh figures came slightly better than analysts' estimated 0.7% drop.

The Raw Materials Price Index (RMPI) reached the lowest level since June 2010, down 5.8%. The newly released data came out worse than analysts expected. Consensu had reached only a 4.7% decline.

Loonie Little Changed Ahead of Employment Data

The Canadian dollar was slightly lower against its US counterpart, as investors geared up for jobs data reports from both countries and speculated over the Federal Reserve’s (Fed) future policy on interest rate hikes.

The so called-loonie edged up 0.02% to C$1.1816 against the greenback on Thursday, after hitting an intraday high of C$1.798.

Crude oil was trading in the green during the North American session, with WTI deliveries for February rising 0.25% to $48.77, alleviating some of the pressure on the resource-linked loonie.

However, currency analysts are estimating that USD/CAD movements around crude oil jumps are going to subside.

"Price action has been influenced greatly by crude oil over the past month and half or so. We are seeing some signals that the bloodline in crude price action might be nearing to a close. The USD/CAD move has been swift and we are expecting some consolidation," director of foreign-exchange strategy at CIBC World Markets, Bipan Rai, told WBP Online.

Meanwhile, traders are keeping a close eye on the American and Canadian employment data reports, scheduled to come out on Friday.

"A lot of the price action is around what is going to happen with the Fed. The focus remains very much on the data and the labor situation is a very important component of that," Rai said by phone.

"And inflation is still an elephant in the room for the Fed. said that the closer they do get to the natural rate of unemployment the sooner they expect inflation to start rising. Natural rate of unemployment is around 5.4% and right now it is at 5.8%."

If the US job numbers are good for December, it "implies that the markets might start pricing for the Fed to move more quickly, being closer to the April meeting," he added. "Implications for the US dollar, is that the data should continue to provide tailwinds.”

In the US, economists expect to see 240,000 new positions added in December and for the unemployment rate to fall down a notch to 5.7%. At the same time, the unemployment rate in Canada is estimated to remain at 6.6% with 14,500 new jobs added in the same month.

Other data

In the US, the fresh initial jobless claims report was released, showing the figure posted a 4,000 improvement, and suggested there might be more momentum than previously anticipated.

The number of people claiming unemployment benefits came in at 294,000 in the week ending January 3, compared to the 298,000 a week ago, according to the fresh report.

On the Canadian side, Statistics Canada revealed that Canada's new home prices matched expectations in November, rising 0.1%, with the western city of Calgary contributing the most to the increase.

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USD/CAD rises to fresh 5-year highs after U.S., Canadian data

The U.S. dollar rose to fresh five-year highs against its Canadian counterpart on Friday, as upbeat U.S. employment data added to optimism over the strength of the U.S. job market, while Canada released a disappointing jobs report.

USD/CAD hit 1.1890 during early U.S. trade, the pair's highest since May 2009; the pair subsequently consolidated at 1.1864, gaining 0.28%.

The pair was likely to find support at 1.1792, Thursday's low and resistance at 1.1951.

In a report, the Labor Department said the U.S. economy added 252,000 jobs in December, exceeding expectations for an increase of 240,000. November's figure was revised to a 353,000 gain from a previously estimated 321,000 rise.

The report also showed that the U.S. unemployment rate ticked down to 5.6% last month from 5.8% in November, compared to expectations for a decline to 5.7%.

The report came a day after data showed that U.S. initial jobless claims fell by 4,000 to 294,000 last week, just slightly above expectations of 290,000, and two days after data showed that the U.S. private sector added a larger-then-forecast 241,000 jobs in December.

Also Friday, Statistics Canada reported that the number of employed people declined by 4,300 last month, condounding expectations for a 15,000 rise, after a 10,700 drop in November.

Canada's unemployment rate remained unchanged at 6.6% in December, in line with expectations.

A separate report showed that Canada's building permits dropped by 13.8% in November, compared to expectations for a 1.0% rise, after a revised 2.1% increase in October.

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USD/CAD Forecast Jan. 12-16 2015

The Canadian dollar enjoyed a quiet week until Friday, when USD/CAD jumped 150 points. The pair closed at 1.1772, its highest level since May 2009. This week’s sole release is the Bank of Canada Business Outlook Survey. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD.

There were no Canadian releases last week, so US events took on added significance. Unemployment claims climbed higher and the ISM Manufacturing PMI softened, but sentiment towards the US economy remains positive.

Updates:

RMPI: Tuesday, 13:30. The Raw Materials Price Index measures inflation in the manufacturing sector. The index continues to point downwards, posting declines in six of the past seven readings. The October reading came in at -4.3%, well off the forecast of +1.5%. Another sharp decline is expected for November, with an estimate of -4.6%.

* All times are GMT

Canadian Dollar Falls to C$1.20 First Time Since 2009 on Crude

Canada’s dollar weakened past C$1.20 per greenback for the first time since April 2009 on concern a continued slump in crude oil, the nation’s biggest export, will damp economic growth.

The currency has lost 2.8 percent this year against its U.S. counterpart as speculation a global oversupply of crude that’s already cut the commodity’s price by more than half since June will drive it down further. Government bonds climbed. Bank of Canada Governor Stephen Poloz, who will release new economic forecasts next week, said in December the slide in oil will cut about a third of a percentage point from growth this year.

“It’s all about crude,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Toronto. “A reduction in crude-oil prices will stagnate growth in oil-producing provinces such as Alberta, Newfoundland and likely Saskatchewan. That hits the Canadian economy and the Canadian dollar.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, appreciated as much as 0.5 percent to C$1.2017 per U.S. dollar before being at C$1.1945 at 9:03 a.m. Toronto time.

Canadian 10-year bond yields dropped to a record-low 1.516 percent as prices rose.

The North American benchmark for crude oil fell to $44.20 a barrel in New York yesterday, a 5 1/2 year low, before trading at $45.80 today. The 2014 high was $107.73 in June.

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