Tag Archives: education

Oil Prices Could Drive the CAD Lower Before the Recession Ends

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Oil Prices Could Drive the CAD Lower Before the Recession EndsOil Prices Could Drive the CAD Lower Before the Recession Ends

Fundamental Forecast for CAD: Bearish

The Canadian Dollar continued to slide lower to start the week, furthering the return of the up-trend in USD/CAD led by a precipitous drop in Oil prices. But a surprise decrease in Oil supplies on Wednesday helped to strengthen Crude prices to finish off the week, and this led to CAD strength for the past three days. But after extended down-trends in both Oil and Cad, the prospect of trend resumption may be near and an attractive entry in both of these markets may be near. read more

Oil Prices May be Creating an Even Larger Problem for Canada

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Oil Prices May be Creating an Even Larger Problem for CanadaOil Prices May be Creating an Even Larger Problem for Canada

Fundamental Forecast for CAD: Bearish

Just last week we reiterated our bearish forecast for the Canadian Dollar on the basis of expected weakness in Oil prices. And last week, that is exactly what we got. But we did also see some positive information on the Canadian economy with a better than expected jobs report on Friday morning to finish off the week. The unemployment rate for the Canadian economy dropped to 7% versus an expectation of 7.1% as 44.4k jobs were added to Canadian payrolls against an expectation for a 10k increase. But looking inside of the numbers will highlight that this isn’t really as bullish as it may first appear, as 32k of those jobs were temporary positions related to the recent Canadian election. read more

Kiwi Catches its Footing Despite Another Spill in Milk Prices

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Kiwi Catches its Footing Despite Another Spill in Milk PricesKiwi Catches its Footing Despite Another Spill in Milk Prices

Fundamental Forecast for the Kiwi: Bearish

In previous pieces on the New Zealand Dollar, we’ve discussed the correlation between Milk prices and the spot rate on the Kiwi-Dollar. This is kind of like a ‘soft commodity’ correlation, similar to how we’ll often see similar types of moves in metals and the Australian Dollar, or Oil and the Canadian Dollar. For economies that have considerable exposure to these commodity classes, it only makes sense that they price roughly in-line with the source commodity. Should prices go up, that means producers make more. With this additional profit, they can reinvest in their business; they can hire more people and that leads to lower unemployment. Wages then need to rise to attract workers to offset this competitiveness in the economy, and then we have inflation. At this point, Central Bankers will usually look at hiking rates (think of that!), and this could drive trade and capital flows into the market to get this new, higher rate. This is that beautifully synergistic impact of a growth story within an economy. read more

GBP/USD Bounces Up to a Lower High Ahead of UK Inflation Data

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GBP/USD Bounces Up to a Lower High Ahead of UK Inflation DataGBP/USD Bounces Up to a Lower High Ahead of UK Inflation Data

Fundamental Forecast for British Pound:Bearish

Last week, my colleague David Song reiterated our Bearish forecast on the British Pound, citing the dovish tone taken by the Bank of England during Super Thursday and the fact that it looked as though the Sterling was going to continue getting hit by depressed rate expectations moving forward. As a matter of fact, one of the big takeaways from last week’s BoE announcement was that not only that the Bank of England wouldn’t likely be raising rates anytime soon, but that we may even be looking at an extension or increase in QE. The prevailing thought being that the Chief Economist of the Bank of England and voting member on the Monetary Policy Committee (MPC) Andrew Haldane may eventually bring on a three-way-vote. After numerous 8-1 splits on the MPC, with Ian McCafferty being the sole dissenter voting for a rate hike; many started to think that Mr. Haldane may also dissent, but voting for looser monetary policy to split the vote even further 7-1-1. read more

Risk-On & Retail Sales Sends AUDUSD to 4-Month Highs

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Risk-On & Retail Sales Sends AUDUSD to 4-Month HighsRisk-On & Retail Sales Sends AUDUSD to 4-Month Highs

Fundamental Forecast for the Australian Dollar: Neutral

  • Uneven GDP Points to Uncertainty Ahead for Australia’s Economy
  • Less dovish RBA and on balance better data flow helping AUD
  • Identify Critical Turning Points for the Australian Dollar with DailyFX SSI

The Australian Dollar peaked over the October 12th high on Friday. The risk-on sentiment as displayed by the SPX500 back near the 2,100 level and a Reserve Bank of Australian that isn’t looking to talk down the currency like they have in the past has provided a consistent bid under the Australian Dollar. Australia’s currency strengthened most aggressively against the Japanese Yen, Canadian Dollar and US Dollar last week finishing higher by 2% across the board. Not only was AUD benefitted from Economic data in the form of retail sales that came in slightly better than expected at 0.5%MoM vs. exp. 0.4% and GDP, but the pricing in a rate cut by the RBA over the next year has nearly disappeared. If the US Dollar remains on weaker through the month of December, a push toward 0.7500 looks increasingly probable with the fundamental and Intermarket wind in the Australian Dollar’s sails. read more