The USD/CAD pair rebounded to the upside on Tuesday, as pessimism dominated markets once again after reports suggested that German Chancellor Angela Merkel rejected increasing the bailout fund for European sovereign debt. Moreover, the worse than expected U.S. retail sales put more negative pressure on confidence, as retail sales rose in November but well below median estimates, retail sales increased by 0.2% in November, worse than median estimates of 0.5%., and accordingly, investors targeted lower yielding assets including the U.S. dollar, which pushed USD/CAD pair higher.
Traders will be eyeing the FOMC rate decision later on Tuesday, where the majority of analysts expect the FOMC to leave the current monetary policy unchanged, while on Wednesday, traders will be following the Import Price Index from the United States, and the leading indicators from Canada.
Nonetheless, traders will also continue to monitor the developments from the 17-bloc euro nation and the European leader’ latest moves to contain the debt crisis, where we expect volatility to persist through the sessions this week.
The USD/CAD pair could still rise if the pessimism continues to dominate markets, but we still expect volatility to hold the steer for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.
Wednesday December 14:
Canada will release the leading indicators for November at 13:30 GMT, which is expected to rise by 0.3% following the prior rise of 0.2% in October.
The United States will join the session at 13:30 GMT with the import price index for November, where the monthly index is expected to expand by 1.0% from the previous drop of 0.6%, while the annual index previous reading was 11.0%.