On Monday the Canadian dollar fell after the announcement of the Italian referendum’s decision not to support constitutional reforms. Such outcome of the voting increases uncertainty of the prospects for the global economy.

Italian people did not support amendments to the Constitution, which were proposed by the government. It means that the populists have won in Italy and Prime Minister of the country Matteo Renzi is going to resign.

At the same time, despite strong US employment data, closing prices at the US stock markets were mixed: DJIA fell by 22 points (-0.1%) and S&P500 closed with no changes at the level of 2 192, Nasdaq Composite has grown by 5 points (+0.1%).

In November, jobs in the United States have grown by 178 000 against the forecast of 175 000 and the rise of 142.000 in October (revised from 161 000).

In the manufacturing sector the number of jobs has dropped by 4000 against the forecast of -2000 and decline of 5.000 in October (revised from -9000).

Unemployment rate in November fell to 4.6% against the forecast of 4.9% and 4.9% in October

At the same time, NFPR was not strong enough to boost further rise in the USD.

Average hourly wages and the share of economically active population have decreased. The market has already incorporated the rate increase of 0.25% in December into the price of the USD. So, if the Fed raises the rate, the USD will not sharply go up.

A lot will depend on the Fed’s accompanying comments indicating future plans. According to CME Group, probability of the rate hike in December is estimated at about 93%.

Oil prices continue to rise on the OPEC decision to cut production. Last Friday at NYMEX oil prices had grown by 1.2%, up to 51.68 USD per barrel. Spot price of crude oil Brent is also rising. In the early European session on Monday it has been recorded at the level of 54.70 per barrel, and this fact supports the CAD.

On Wednesday at 18:0 GMT+3 a meeting of the Bank of Canada will be held. It is expected that the Central Bank will not change the key interest rate, keeping it at a record low of 0.5%.

In an accompanying comments the Bank of Canada will give reasons for its decision and evaluate current economic situation in the country and outline future monetary policy. Volatility to the Canadian dollar will go up. However, continuing rise in oil prices will support the Canadian dollar.USD/CAD: the price of oil is going up.  Fundamental analysis for 05/12/2016




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