USD/CAD Forecast Dec. 21, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 21, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 21, 2011, Fundamental Analysis
The USD/CAD pair declined sharply on Tuesday, as the US dollar lost strength following data out from both German and US economies, where Germany’s IFO business climate inclined above expectations, in addition, the U.S housing starts and building permits knocked out analysts’ median estimates.

While Canada reported the CPI down from the prior reading but in line with expectations, on the other hand, Spain sold short-term bills with lower yields, which accordingly boosted risk appetite among traders for higher-yielding assets, including the Euro, British Pound and stocks.

As the year nears to end, lights are about to fade upon the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The USD/CAD pair could bounce up if 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 21:

Canada will release more data on Wednesday, as analysts’ expect retail sales will edge up  during October, with 0.5% rise from 1.0% reported in September, while the retail sales less autos may rise 0.2 percent short from the 0.5 percent in the same month as well.

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