CAD: Canadian Dollar weakens on Tuesday

The Canadian Dollar rate decreases at the Forex currency market on Tuesday, amid investors’ aversion to risk.

Forex forecast: MACD indicator is in the positive area for the pair USD/CAD and goes down, giving a sell signal. Stochastic Oscillator is going up in the neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.0240, the pair will go 1.0250 and 1.0265.

If upward breakdown does not take place, the pair will remain at the current levels.Canadian companies are going to continue effective work in the future and increase volume of investments, creating new jobs, however not as fast as it was announced earlier. The country has lowered its forecast for sales in 2012; as a result local producers have to temper their personal forecasts.

According to the estimates of the Bank of Canada, sentiment of the leaders of the large companies fell down compared with the summer period, since top management expects the decrease in the U.S. GDP and conservation of uncertainty in respect to global economic outlooks.The Bank of Canada believes that GDP of the country will amount to about 2.8% in 2011 (reduction by 0.1% versus forecast of April); in 2012 it will be 2.6% and 2.1% in 2013. According to the evaluation of the Bank, exports performance in Canada is negative because low demand in the USA prevents the rise of the indicator and expensive CAD makes situation even more complicated. T

he growth in the interest rate in Canada will directly depend on stability in economic development.By the way, CPI in Canada rose by 0.3% m/m (+3.1% y/y) in August.Now, heads of the major Canadian companies have recorded decline in inflationary expectations; it is projected that in 2012 CPI will be in the range of 1-3%.The head of the Bank of Canada Mr. Carney said earlier that there are several significant obstacles on the way of Canadian economic development.

First of all it is the growth of the Canadian Dollar and secondly, it is European debt crisis, plus to this, drawn-out dialogue about the U.S. national debt also casts a dark shade on the Canadian economy. Central Bank will be able to waive further economic stimulation only when economic system will show steady self-sustained growth.Unemployment rate in the country decreased to 7.1%; while employment rate in the country increased by 60.9 thousand. For the Canadian economy that is closely linked with the economy of the USA it is a significant step forward.

Meanwhile earlier unemployment rate in Canada increased to 7.3% in August against the forecast of 7.2% and previous level of 7.2. In addition, labor productivity fell by 0.9% on quarterly basis in Q2 against the forecast of decline by 0.7% q/q. It also became known that number of begun construction in Canada fell to 184.7 thousand in August against the forecast at 200 thousand. It is clearly obvious at the moment, that slowdown in the key indicators was caused by the state of the global economy and proximity to the Unites States.