The USD/CAD pair was little changed last week, as investors were concerned over the outlook for global growth amid signs economic growth is slowing down in the United States, while mounting fears from the European debt crisis boosted demand for lower yielding assets, which provided the USD/CAD pair with the needed momentum to maintain its previous gains.
Rising pessimism in global financial markets should put the CAD under more pressure over the coming period, where investors fear the U.S. economy is heading into a double dip recession, and since the United States is Canada’s largest trading partner, we should expect the Canadian economy to suffer deeply, and that should provide the USD/CAD pair with bullish momentum, unless of course the Fed announce a third round of quantitative easing, since it will put the USD under huge pressure. Moreover, a looming liquidity crisis in Europe could also weigh down on confidence levels, and that should also provide the USD/CAD pair with more upside momentum.
Highlights for this week that will probably affect the USD/CAD pair’s direction are:
Monday August 22:
No major data is queued for release from both the United States and Canada on Monday, as the start of the week will be focused on the prevailing downbeat sentiment and fear of the worsening outlook.
Tuesday August 23:
Canada will release the retail sales index for the month of June at 12:30 GMT, where retail sales are expected to rise by 0.5%, compared with 0.1% in May, while retail sales less autos are expected to rise by 0.2% in June, compared with 0.5% in May.
The United States will start the data at 14:00 GMT with the New Home Sales for July which are expected with 1.0% rebound to 315 thousand from 312 thousand.
Wednesday August 24:
The Durable Goods Orders are due from the United States at 12:30 GMT for July and expected with 2.0% rebound following 2.1% slump while excluding transportation expected with 0.6% drop following 0.1% rise.
Thursday August 25:
The weekly jobless claims are due from the U.S. as usual at 12:30 GMT after last week they unexpectedly rose to 408 thousand.
Friday August 26:
The week will end with the infamous GDP from the U.S. at 12:30 GMT. The preliminary reading for the second quarter is expected downbeat on the market with the projected downside revision to 1.1% from 1.3%. Personal consumption expected with upside revision to 0.2% from 0.1% while the Core PCE expected steady at 2.1%.
The week will end with the University of Michigan Confidence final reading for August at 13:55 GMT, which is expected with an upside revision to 56.0 from the advanced estimate of 54.9.