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USD/CAD Monthly Fundamental Forecast May 2015

usd cad bns monthOutlook and Recommendation

The USD/CAD was on a roller coaster in April with the US dollar high and then low and oil prices rallying in the later half along with a short surge in gold. The CAD moved into May just a tad under the 1.21 price.

Markets are dialing back their expectations for further interest rate accommodation from the BoC following constructive economic guidance and an all-out-turn towards a neutral interest rate posture in the April BoC statement and MPR. The BoC’s rationale seems to be:

a) That it believes that the impact of the decline in oil prices on the economy was ‘front-loaded’ and that the worst has already happened,

b) That financial conditions in Canada are already accommodative enough,

c) That it believes that an upside surprise from the US economy could cause a Canadian pick-up midyear. Of course, the implications of the oil price decline may not yet be fully realized leading us to still anticipate an accommodative BoC with no hikes in our forecast.

The first quarter of 2015 has revealed softer-than-expected economic data, with persistent commodity price weakness dragging on growth, and spillover effects from the US limiting exports. Even with an expected pickup in activity in the second half of the year, GDP is likely to advance less than 2% y/y this year, following 2 ½% growth in 2014. Employment grew just above ½% in 2014, the lowest in five years, with sluggish wage growth continuing into the first few months of this year. Markets expect the labour market to add roughly 10,000 jobs per month this year, a similar pace to 2014, with positive momentum in the manufacturing sector offsetting restructuring in the oil patch.

ForexTraq provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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Major Economic Events In The Month of May

Date

Currency

Event

 

 

May 1

GBP

 

Manufacturing PMI

 
 

USD

 

ISM Manufacturing PMI

 

May 5

EUR

 

Spanish Unemployment Change

 
 

GBP

 

Construction PMI

 
 

USD

 

Trade Balance

 
 

USD

 

ISM Non-Manufacturing PMI

 

May 6

GBP

 

Services PMI

 
 

USD

 

ADP Non-Farm Employment Change

 
 

USD

 

Fed Chair Yellen Speaks

 

May 7

GBP

 

Parliamentary Elections

 
 

USD

 

Unemployment Claims

 

May 8

USD

 

Non-Farm Employment Change

 
 

USD

 

Unemployment Rate

 

May 11

GBP

 

Official Bank Rate

 
 

GBP

 

MPC Rate Statement

 

May 12

GBP

 

Manufacturing Production m/m

 

May 13

EUR

 

German Prelim GDP q/q

 
 

GBP

 

Average Earnings Index 3m/y

 
 

GBP

 

Claimant Count Change

 
 

ALL

 

G7 Meetings

 
 

GBP

 

BOE Gov Carney Speaks

 
 

GBP

 

BOE Inflation Report

 
 

USD

 

Core Retail Sales m/m

 
 

USD

 

Retail Sales m/m

 

May 14

USD

 

PPI m/m

 
 

USD

 

Unemployment Claims

 

May 15

USD

 

Prelim UoM Consumer Sentiment

 
 

ALL

 

G8 Meetings

 

May 19

GBP

 

CPI y/y

 
 

EUR

 

German ZEW Economic Sentiment

 
 

USD

 

Building Permits

 

May 20

EUR

 

French Flash Manufacturing PMI

 
 

EUR

 

German Flash Manufacturing PMI

 
 

GBP

 

MPC Official Bank Rate Votes

 
 

USD

 

FOMC Meeting Minutes

 

May 21

GBP

 

Retail Sales m/m

 
 

USD

 

Unemployment Claims

 
 

USD

 

Philly Fed Manufacturing Index

 

May 22

ALL

 

G7 Meetings

 
 

USD

 

CPI m/m

 
 

USD

 

Core CPI m/m

 

May 25

EUR

 

German Ifo Business Climate

 

May 26

USD

 

Core Durable Goods Orders m/m

 
 

USD

 

CB Consumer Confidence

 

May 28

USD

 

Unemployment Claims

 

May 29

GBP

 

Second Estimate GDP q/q

 
 

USD

 

Prelim GDP q/q

 

 

 

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