Forex Investment and Currency Trading

With the commodity price ‘bubble’ of 1H 2008 now fully reversed, the Canadian dollar has more than fully adjusted. Still, it leaves the Canadian economy potentially more exposed to US recession than before and, responding to this, more Ministers with an economics function in the new Harper cabinet are from Ontario. Canadian October jobs report due this Friday, just ahead of US numbers.
The Bank of Canada’s commodity price index, a mix of energy, farm and metals/minerals products, has fully retraced the apparent bubble-like conditions inspired by the global liquidity surge of 1H 2008 and is now consistent with the rather [...]

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October 31

Canada  - GDP
Consensus: -0.4%

Economics: Canadian economic activity is likely to be hit hard in August as the impact of a worsening U.S. economy, slumping commodity prices and weak manufacturing sector activity overwhelm the favorable support coming from the weakening domestic currency. Canadian GDP is expected to fall by a sizeable 0.4% M/M, following the brisk +0.7% M/M pace in July. Much of the weakness during the month is expected to come from the dramatic slowdown in manufacturing sector production, with sluggish retail and wholesale activity, and declining real commodity exports providing additional drag on activity. Looking ahead, the Canadian economy [...]

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Economics: The Bank of Canada comes into its next scheduled rate decision having conducted a 50bp inter-meeting rate cut less than two weeks before.  The most recent Bank of Canada statement mused on the possibility of “further action”, signalling that additional rate cuts are at least on the table for discussion.  Simultaneously, three key factors — the U.S. economy, commodity prices, and credit conditions — have all deteriorated both over the past few months and also since that last rate cut just a few weeks ago, leaving the Bank of Canada likely inclined towards additional easing.  Market forecasts a 50bp [...]

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Little change expected. With the BoC having undertaken a timely easing process earlier than most in the one-year global credit crunch timeline, the CAD has been sidelined relative to sharp moves in other currencies. Moreover, since the overshoot in the CAD late last year was corrected, indications are that the BoC thought the narrow range around parity from November to July, and then the subsequent CAD weakening in association with lower commodity prices, were about right.

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