USD/CAD Forecast Jan. 6, 2012, Fundamental Analysis

The USD/CAD pair rose as the U.S dollar strengthened with yesterday’s German auction and today’s French auction markets turned pessimistic and the Euro slipped below $1.28, where France’s borrowing cost surged again, while demand for the French securities was weak, which raised fears in the market that France, the second largest economy in the euro-area region, could lose its AAA credit rating soon.

Fears started growing this week that euro zone leaders might fail to find a comprehensive solution to the debt crisis which could drag the region into a deep recession and infect the global economy especially after Greece warned it might exit the euro zone if the country won’t get more financing.

Now, eyes will be spotted on this year, and the performance of the European economy, especially after the ECB lent the European banks huge amount of money, and if that money will help the euro zone to continue recovery process amid big challenges.

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.

Friday January 6:

Canada will release the report of unemployment for the month of December; it is expected to show unchanged reading of 7.4%. Moreover, eyes will still focused on Europe and the crises that could cause any change in trading.

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