The USD/CAD pair fell to the downside on Monday, where optimism spread through global financial markets ahead of the ECB meeting and the EU summit later this week, where investors were hopeful that EU leaders can craft a plan to ease the worsening debt crisis inEurope.
The USD/CAD pair could fluctuate heavily on Tuesday, where the Bank of Canada will announce its decision on interest rates, as the BOC is expected to leave rates unchanged at 1.00%, yet investors will be eyeing the accompanying statement for clues over the BOC’s monetary policy path.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where reports suggest thatGermanyandFrancereached an agreement on a plan to ease the European debt crisis. Nonetheless, tensions remain elevated in financial markets, as investors are concerned that EU leaders will fail to reach an agreement again after suffering similar disappointments over the past few months.
The USD/CAD pair could still drop if the current wave of optimism continues to dominate markets, but we still expect volatility to continue to dominate trading, as uncertainty remains the dominant theme in markets, and that could also lead to high levels of fluctuations for the USD/CAD pair.
Tuesday December 6:
Canadawill release the building permits index for October at 13:30 GMT, where building permits fell in September by 4.9%, and projections show building permits increased by 1.6% in October.
The Bank of Canada will announce its decision on interest rates, where the BOC is expected to leave the benchmark interest rate unchanged at 1.00%.
The Ivey PMI for November will be released at 15:00 GMT, which is expected to rise to 55.0 from 54.4 in October.