USD/CAD Daily Fundamental Analysis
The USD/CAD pair extended its drop on Wednesday, as the U.S. dollar lost momentum against major currencies after the Federal Reserve Bank’s Chairman, Ben S. Bernanke, signaled in his semi-annual testimony before the House of Representatives that the Fed is ready to undertake a third round of quantitative easing (QE3) if economic conditions remain weak in the United States, which fueled optimism in equity markets and led investors to target higher yielding assets, which weighed down on the USD/CAD pair.
The weakness of the USD prompted crude oil prices to rise, and crude oil prices were further supported by the bigger than expected drop in crude oil inventories as shown by the EIA report, which provided the CAD with strong momentum to rise, and accordingly, pushing the USD/CAD pair to the downside.
The pair’s outlook could change to the downside over the coming period, especially since markets will be stressing the possibilities of QE3, and that should put downside pressure on the USD and accordingly push the USD/CAD pair further to the downside. Nonetheless, we still believe that the European debt crisis could still weigh down on confidence, especially if new developments emerge, and that could lead the pair to rise back.
Thursday July 14:
It will be a busy day for the U.S. economy with heavy data due for release at 12:30 GMT. The start will be with the Producer Price Index for June which is expected with 0.2% drop reversing the same earlier gain and rise 7.4% on the year; Core PPI is expected steady in June at 0.2% while to rise slightly on the year to 2.2% from 2.1%.
At the same time, the June retail sales are expected also with weakness, where sales less autos are expected with 0.1% rise following 0.3% and excluding auto and gas with 0.4% gain following 0.3%.
The weekly jobless claims are also to be released at the same time after the improvement in the claims reported the previous week when they eased to 418 thousand.
Business inventories report is due at 14:00 GMT for May and expected at 0.6% following 0.8%; it is a very minor report and does not affect the market.
At 14:00 GMT, the Fed’s Chairman Ben Bernanke will provide his semi-annual testimony before the Senates, although Bernanke is expected to give the same testimony he gave to the House of Representatives on Wednesday.
AUD/NZD Daily Fundamental Analysis
The AUD/NZD pair traded near its lowest level in eight months, after the New Zealand dollar recorded a new all time high. The Australian dollar is still surfing against greenback, opening the way for Kiwi to control the pair’s movement.
The better than expected GDP during the first quarter for the New Zealand economy supported Kiwi, and prevent it from declining against greenback and other currencies, as the market sentiment returned to focus on the low yielding currencies.
The cheerful outlook for the New Zealand economy helped Kiwi to dominate the AUD/NZD pair’s movement during the last period, as the Reserve bank of Australia is still dovish which reduced demand for the Australian dollar.
Both countries won’t release any fundamentals on Friday leaving the movement on the back of the prevailing sentiment and affected by their performance mainly versus the dollar.
AUD/USD Daily Fundamental Analysis
The AUD/USD pair dropped early Thursday from its highest level in two weeks, as the greenback returned to climb against its major counterparts as a safe haven. On the other hand, the Aussie lost its momentum after the Australian confidence collapsed to its lowest level since 2009.
The US dollar gained against the high yielding currencies, after Moody’s Investors Service warned it may downgrade the US rating. Investors’ confidence faded due to the gloomy outlook for the U.S. economy, pushing them to abandon the risky assets and shift to the dollar once again.
The U.S. economy is to release the consumer price index for June at 12:30 GMT, which is expected to drop by 0.1% following the previous rise of 0.2%. The annual consumer price index for June is expected to come at 3.6% in line with the previous.
At 12:30 GMT, the U.S. will release the Empire manufacturing survey for July, and the expectations refer to 4.0 from the previous – 7.79.
The industrial production for June is due at 13:15 GMT, where the previous reading was 0.1% and expected to come at 0.4%. As for the capacity utilization for June; it’s expected to come at 77.0% from the previous 76.7%.
The U.S. economy will also release the University of Michigan Survey of consumer confidence for July, where the preliminary reading is expected to come at 72.5 from the previous 71.5.
NZD/USD Daily Fundamental Analysis
The New Zealand currency succeed to compensate its losses against the US dollar, when it recorded a new multi decade high versus the greenback as the New Zealand economic growth expanded in the first quarter more than double expectations, where the cheerful first quarter for the New Zealand was strongly supportive for the nation’s currency.
Moreover, business confidence rebounded in the second quarter from a two-year low in the first three months of the year, increasing the investors’ confidence in the New Zealand economy amid the European debt crisis and the sluggish US economy.