The USD/CAD pair dropped on Tuesday as the USD lost strength after markets turned optimistic, as the Chinese GDP showed an expansion in fourth quarter growth better than expected, adding that markets continued the sharp rebound after the upbeat European economic sentiment and the slowdown in inflation in addition to the Spanish bond sale.
On the other hand, sentiment continued to be positive after the European Financial Stability Facility (EFSF) sold the targeted amount of bills at an auction today which was met with strong demand.
And as already strongly expected the Bank of Canada left its benchmark rate unchanged as it did for this long past period to continue on supporting its stable and gradual growth and present economical conjuncture since that overall global and local conditions remain mixed and the global recession continue on limiting its sectors activities enhancement.
The USD/CAD pair could still rise if pessimism continues to dominate markets, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.
Wednesday January 18:
Canada will be absent over the session tomorrow, so fluctuating trading in the USD/CAD pair is expected, and eyes will be focused on Europe and the crisis that could cause any change in trading.