US Shows Signs of Recovery

Financial markets were quiet on yesterday, with only two days before the Christmas holiday. Financial Stocks drove the markets today and the U.S economy released better than forecasted reports, adding to signs the economy was improving, pushing US markets upwards.

GDP figures were the only negative in the forecasts today but that was a revision of prior quarter results, the U.S Department of Commerce announced the economy grew at slower pace than forecasted in the third quarter, as third-quarter growth was revised to 1.8 percent from 2.0 percent annual pace, below median estimates of 2.0 percent as well. A prior report said that health care spending increased at a $19.7 billion rate. Health care spending subtracted about 0.1 of a percentage point from the G.D.P. change in the final revision, whereas in the previous estimate, it added 0.61 of a percentage point to growth.

Despite the downward revision, the third-quarter growth is still a step up from the April-June period’s 1.3 percent pace. Part of the pickup in output during the last quarter reflected a reversal of factors that held back growth earlier in the year.

Other supportive news was the U.S Department of Labor report that the U.S jobless claims fell to the lowest level since April 2008, beating median estimates for the third consecutive week, while Michigan’s confidence rose more than forecast in December, in addition, the U.S Conference Board’s leading indicators climbed above projections in November.

A survey released on Thursday showed that consumer sentiment rose in December to its highest level in six months. And a gauge of future economic activity increased more than expected in November because of a sharp pickup in new permits to build homes.

But revised data showed that the nation’s economic growth was slower than previously estimated in the third quarter because of a sharp drop in health care spending. Stronger business investment and a fall in inventories pointed to a pickup in output in the current period.

Slight gains were seen in the currency markets today, but the biggest were mostly in the equities since demand for safe havens ebbed down. The U.S dollar erased an early gain after oil rose for the fourth consecutive day, euro and pound rose while the yen fell following strong economic reports about the U.S economic progress.

Meanwhile, the U.S dollar index eased below the opening level of 80.18 to trade at $80.18, recording the highest level of 80.138 and lowest level of 77.646. The EUR/USD pair inclined faintly from the opening level $1.3036 levels and currently steady at $1.3043 levels.

The GBP/USD pair traded above the cut at $1.5679 compared to the opening level of $1.5667, while the USD/JPY pair picked up slightly after opening at ¥78.08 levels and currently bottled up at ¥78.17 levels.

The US government’s count of first-time filings for unemployment benefits last week declined to 364,000. And, the Conference Board’s index of leading economic indicators rose 0.5% in November after a 0.9% rise the month before.  Separately, the Thomson Reuters/University of Michigan’s final reading of consumer sentiment rose to 69.9 in December from 64.1 at the end of last month.

USD/CAD Forecast Dec. 23, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 23, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 23, 2011, Fundamental Analysis
The USD/CAD pair fell for the third day in a raw after the dollar dropped and stocks rose amid signs the economy is strengthening, as the US jobless claims dropped to the lowest level since April 2008 and US confidence came better than expected, together overshadowed slower than forecasted US GDP.

As the year nears to end, lights are about to fade upon the financial markets and we 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 strengthen if pessimism continues to dominate markets, but we still expect volatility to hold a grip for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Thursday December 23:

Canada will release the latest GDP estimates for the month of November, where analysts suggest the economy grew at a slower pace in November.

USD/CAD Forecast December 22, 2011, Technical Analysis

USD/CAD fell on Wednesday as the oil markets gained. However, the Dollar saw a bid in the afternoon in Europe and the later hours of the US session, forming a hammer just above the 1.02 level. The area has been supportive in the past, and the forming of this hammer at this level is a truly bullish sign indeed. The breaking of the highs from Wednesday would signal higher rates, and we would be willing to be long of this market at that point. However, shorting this pair will be very difficult as we see support all the way back down to the 0.99 level.

USD/CAD Forecast December 22, 2011, Technical Analysis
USD/CAD Forecast December 22, 2011, Technical Analysis

USD/CAD Forecast Dec. 22, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 22, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 22, 2011, Fundamental Analysis
The USD/CAD pair pared earlier losses, where the dollar strengthened after the European Central Bank offered more than expected loans for the euro-area banks, mirroring the worsening impact of the debt crisis on European lenders, in addition, Canada released its retail sales figures which came better than forecast.

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 still rise if pessimism continues to dominate markets, but we still expect volatility to dominate the scene, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Thursday December 22:

The Canadian economy won’t be joining the session due to lack of economic fundamentals from Canada on Thursday, so eyes will be locked on the euro zone and the US for more for data that could majorly affect the Canadian dollar.

USD/CAD Forecast December 21, 2011, Technical Analysis

USD/CAD fell on Tuesday as the oil markets rallied hard. The pair managed to break below the 1.03 level for a sustained period of time during the session, but bounced back above it by the close. The level looks as if it is trying to be supportive for the market, and the move is probably somewhat overdone as the Light Sweet Crude market rose over $3 for the session. With this in mind, we are willing to buy on supportive action, but are aware of the light volume and ferocity of the Tuesday move. The parity level below is the next massive support area, extending all the way down to the 0.99 mark. The economic situation didn’t exactly change overnight, so this move is probably a bit suspect at this point.

The oil markets are getting a boost by fear mongering about the Iranian tensions and the North Korean succession questions. To be honest, this is more likely to be market noise once it is all said and done. The Canadian dollar will certainly get sold off once calm returns to the oil markets as the recent drama turns out to be just that – drama.

The breaking below the 0.99 level has us changing our minds, and the area all the way down to that mark 400 pips below will certainly have plenty of supportive positions. With this in mind, our proclivity is to buy on dips, and on supportive candles. We like the fact that 1.03 has held, and now would look for short-term hammers and the like to buy from. The market looks bullish still, despite the impressive moves in crude. In fact, the USD/CAD pair didn’t move nearly as much as you would expect on a day that oil markets skyrocketed, which could be a tell in and of itself.

The breaking of 1.04 has us thinking that we are heading to 1.05, 1.07, and then onto 1.10 eventually. We are still bullish on this pair, and one day doesn’t change this conclusion. The pair will continue to be bought on the dips by us.

USD/CAD Forecast December 21, 2011, Technical Analysis
USD/CAD Forecast December 21, 2011, Technical Analysis

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.

USD/CAD Forecast December 20, 2011, Technical Analysis

USD/CAD had a volatile session on Monday as the market closed in an unchanged manner. The range was somewhat extended, but the more important fact is that the 1.03 level has continued to hold as support. The chart looks bullish, and the oil markets are looking weak. As oil wells off, the Canadian dollar does as well. The 1.05 level looks to be resistance in this pair, and the 1.07 level above it should be as well. The braking of the 1.05 leads to the 1.07, and the breaking of the 1.07 level leads to the 1.10 level. The pair looks ready to rally, but there is a lot of pressure to the downside in this pair, so it will be more of a grind than a run. We buy dips as long as we stay above 1.03 or so. We are not selling until we get below the 0.99 level in this pair.

USD/CAD Forecast December 20, 2011, Technical Analysis
USD/CAD Forecast December 20, 2011, Technical Analysis

USD/CAD Forecast Dec. 20, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 20, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 20, 2011, Fundamental Analysis
The USD/CAD pair dropped but rebounded a little following Canada’s wholesale sales index for October, where wholesale sales jumped 0.9 percent from 0.3 percent that was upwardly revised to 0.5 percent for September and better than median estimates of 0.1 percent, however, the pair traded below the opening levels as the US dollar strengthened over the day amid speculation over economical instability in Asia following the death of North Korean leader Kim Jong-il.

As the year nears to end, lights are about to fade around 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 will be mostly concerned about the latest development from the 17-bloc euro area.

Still, The USD/CAD pair could pick 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.

Tuesday December 20:

Canada will be joining the session data on Tuesday, where we expect that Canada’s consumer price index for November, where Canada CPI is expected to ease at 0.1 percent in November from 0.2 percent, while the core CPI is expected to rest at 0.1 percent from 0.3 percent registered in October.

USD/CAD Forecast December 19, 2011, Technical Analysis

On Friday, the USD/CAD pair managed to retest the 1.03 level as support and finished the day on a positive note. The oil markets are presently going to be the tell for the pair as the Brent market in particular looks very weak. The Loonie is heavily influenced by this commodity, and as long as there is pressure on the oil markets, there will be upward pressure on this pair.

The Dollar is enjoying a bid in this “risk off” environment, and as long as the EU is struggling with this crisis, there will remain strong demand for Dollars. This keeps us from selling Dollar related assets currently, and especially against the commodity currencies like the Loonie. As long as we can keep above the 1.03 level, we are buying dips.

USD/CAD Forecast December 19, 2011, Technical Analysis
USD/CAD Forecast December 19, 2011, Technical Analysis

USD/CAD Forecast for the Week of December 19, 2011

USD/CAD had a bullish week and even broke through the 1.03 level. The market looks strong at this point, as the lows continue to rise over time and the parity level is now massive support. With this in mind, we are willing to buy the dips now. The market has been buying the US dollar over time, and the USD/CAD pair isn’t any different. The pair likes to grind sideways, and this period of time might be more of that, but with an upward bias. As long as there is a possibility of headline risk out there, we aren’t going to be selling the Dollar against commodity currencies like the CAD.

USD/CAD Forecast for the Week of December 19, 2011
USD/CAD Forecast for the Week of December 19, 2011

USD/CAD Weekly Forecast December 19-23, 2011, Fundamental Analysis

USD/CAD Weekly Forecast December 19-23, 2011, Fundamental Analysis
USD/CAD Weekly Forecast December 19-23, 2011, Fundamental Analysis
The USD/CAD pair rallied to the upside last week, as the U.S. dollar strengthened on mounting fears the European debt crisis is worsening, after the market saw the ECB and the EU summit nothing but a major disappointment and rating agencies continued to add their negative imputes to the abysmal equation..

Over the week, economic data from the United States basically showed better than expected economic progress, where the manufacturing sector activities continued to expand in December, while this week our eyes will be on market movements rather than the data as this is the last week before Christmas and the end of the week and position squaring and closing the books will be evident as traders step aside ahead of the New Year and that will be the main focus.

We need to track the debt sales this week as well with eyes on Italy, France, Greece and Portugal as the yields and demand will be closely observed. The euro area lacks major fundamentals yet the debt crisis developments and any comments from leaders will be watched and the Italian Senates are expected to follow the lower house of Parliament vote and also okay Monti’s 30 billion austerity package this week.

As for the United States the data is heavy housing data alongside the GDP and income report. The data will add to the volatility in the market, especially if the data worsens and adds to fears of slowing global growth yet good data might help in easing the strain on markets that are preparing for the holidays ahead.

The high level of uncertainty in markets could provide the USD/CAD pair with more bullish momentum, where traders will be eyeing developments in Italy and Spain, and accordingly, we should expect Europe to dominate the pair’s movement next week. Nonetheless, if optimism spreads through markets, the USD/CAD pair will decline, as demand for higher yielding assets is likely to rise in that case, and that should provide the Canadian dollar with flow.

Other news from the euro area and the U.S. economy to affect the pair this week:

Monday December 19:

We don’t have news from the United States and Canada, and accordingly, traders will be focused on the developments from Europe.

Tuesday December 20:

The United States will start the day at 13:30 GMT with the November housing starts which are expected with 0.3% rebound to 630 thousand from 628 thousand. Building permits are expected to drop 1.8% to 633 thousand from 653 thousand.

The inflation week continues in the Canada with the Consumer Price Index for November at 12:00 GMT. The index is expected to ease to 0.1% and on the year to ease to 2.9%. Core CPI is expected to ease to 0.2% and on the year to ease to 2.2%.

Wednesday December 21:

At 13:30 GMT, Canada will release the retail sales for October, where retail sales are expected rise by 0.5%, while retail sales excluding autos are expected to rise by 0.3%, compared with 0.5% in September.

At 15:00 GMT the US Existing Home Sales for November are due and expected with 2.2% rise to 5.06 million from 4.97 million.

Thursday December 22:

The United States will start the busy day at 13:30 GMT with the final and third revision for the third quarter GDP as the expansion is expected unrevised at 2.0%. Personal consumption is expected to hold at 2.3% and the Core PCE to remain at 2.0%.

The Jobless Claims are due the same time after the unexpected huge drop in the past week to 366 the lowest in three and a half years.

The University of Michigan Confidence final estimate for December is due at 14:55 GMT and expected with an upside revision to 68.0 from 67.7.

The leading indicators for November will be released at 13:00 GMT and expected to ease to 0.3% from 0.9%.

Friday December 23:

The week will end with the United States as well starting with the Durable Goods Orders at 13:30 GMT which is expected with 2.1% rebound in November after 0.7% drop and excluding transportation it’s expected to rise by 0.4% after 0.7% gain.

The November Income Report is also due at 13:30 GMT with the Personal Income expected with 0.3% rise after 0.4% and personal spending expected to rise 0.3% after 0.1% as for the core PCE it is expected to hold at the previous gains with 0.1% rise on the month and 1.7% on the year.

New Home Sales for November will be released at 13:00 GMT which is expected with 2.0% rise after 1.3% gain to 313 thousand.

Canada will release the GDP report for the month of October at 12:30 GMT, where GDP is expected to rise by 0.1%, compared with 0.2% rise in September.

USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 19, 2011, Fundamental Analysis
, as the investors are targeting lower-yielding assets, where uncertainty continues to surround the outlook ofEurope’s debt crisis, while economic fundamentals proved the world’s largest economy is on the right track of recovery as 2011 nears to end.

This week the focus will shift to the end of the year trading as this week is the last before the holiday infamous for low volume and tight ranged trading. The sentiment will start to shape as investors stay aside ahead of the start of the coming year and closely eye developments from the euro area.

On Monday, eyes will be focused on the French auction, with hopes bond yields decline this time, as rating agencies still has its top credit rating under the line of fire.

The USD/CAD pair could still rise 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.

Monday December 19:

We don’t have news from the United States and Canada, and accordingly, traders will be focused on the developments from Europe.

Markets React to a Week of Good News from the US

Investors are looking past the European debt crisis and banking fiasco and are looking close to home again. This week was a week of good solid financial reports from the US that were overlooked and overshadowed by the constant distractions from the EU.

The US unemployment dropped significantly, a much better than expected results. Holiday shopping remains brisk, although November figures were disappointing. Black Friday and Cyber Monday, were incredible retail days, but shopper had saved and waited all month, so the month was way down, it was the incredible turn out after the Thanksgiving Holidays that turned the month of November around. Hopefully, these numbers will continue through to the end of the shopping season. Consumer Sentiment is up.

At last week’s Fed meeting, Ben Bernanke, took little action,but stated that the US economy was showing improvement, but very slowly. It is moving in the right direction. The Fed, decided to leave things alone through the holiday season, and wait and prepare for the first quarter in 2012.

New York Manufacturing was up along with Philly, Industrial Output dropped a small amount but less than expected going into the holiday season.

The Regional Fed Factory report was up. The current account deficit was down.  The Commerce Department said the U.S. current account deficit fell to the lowest level in almost two years. The current account measures the inflow and outflow of trade and money between the U.S. and the rest of the world.

Yesterday, the New York Federal Reserve said its Empire State manufacturing gauge rose in December to its highest level in seven months.

As the week draws to an end, Asian shares took a bounce upwards as strong U.S. economic data aided relief-buying after a string of recent losses, although trading was light on concerns about the euro zone crisis and ahead of the weekend.

China’s Shanghai Composite popped out of a six-day losing streak to soar 2% to 2,224.84 and Hong Kong’s Hang Seng moved up 1.4% to 18,285.39.

Japan’s Nikkei Exchange closed0.3% higher at 8,401.72, Australia’s S&P/ASX 200 hopped up to 4,159.20, South Korea’s Kospi rose1.2% to 1,839.96 and Taiwan’s Taiex inched up 0.3% to 6,789.09.

US shares in premarket trading are rising before today’s release of the Consumer Price Index, futures rose on the Dow  48 points to 11,870 and on the S&P they climbed 7.20 points to 1,218.9. The NASDAQ joined the club climbing 12.25 points to 2,235.5.

The economic calendar is minimal today and things have been quiet from the EU, US markets should continue upwards. The dollar remains strong today

USD/CAD Forecast December 16, 2011, Technical Analysis

USD/CAD fell on Thursday as oil markets regained some of the losses they suffered on Wednesday. The pair fell back down to the 1.03 levels, and area that we hoped to find support. The level has held up fairly well, and a bounce has been seen on the lower time frames. The breaking above the 1.03 signified real strength in the bullish bias in this pair on Tuesday.

The oil markets will more than likely be plagued by the weakening economic outlook for much of the industrialized world. The Canadian dollar will continue to suffer as long as there is serious threat of global recession, and lower demand that comes with it. The Chinese economy, one that has been so strong in its needs for crude oil, is currently slowing down as well – and this could spell out lower oil prices.

The rising Dollar is a trend that we expect in general as all commodities should be viewed with suspicion at the moment. The situation in Europe simply applies too much upward pressure on the safe haven currencies, and the Dollar is chief amongst them. The strength of the pair isn’t going to necessarily have anything to do with expectations of Canada, rather a rush to the safety of US Treasures and other “safe assets” in the United States.

The pair will struggle against the 1.05 resistance area, but overall looks up to the task. The braking of that level will lead to 1.07, and in turn that area could lead to 1.10 before it is all said and done. This pair likes to grind for some time, and then suddenly run hard in one direction or another. Because of this, it is very difficult to say when these moves will happen, but they do look very likely.

The downside looks fairly well protected by both 1.03 and parity, and given a choice – we are more comfortable buying at this point. In fact, we are presently buying dips as long as we are above the 1.03 level, and even as low as parity.

USD/CAD Forecast December 16, 2011, Technical Analysis
USD/CAD Forecast December 16, 2011, Technical Analysis

USD/CAD Forecast Dec. 16, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 16, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 16, 2011, Fundamental Analysis
, as optimism dominated markets following upbeat economic reports from Europe and theUnited States, indicating that the economic recovery is adding stream regardless of the escalating debt woes that have been spreading fears around the markets.

In a busy session for the U.S economy, data from the U.S Department of Commerce showed that jobless claims dropped to 366 thousand from 385 thousand, the lowest level in three years, while manufacturing data came much better than forecasted in December.

A gauge of manufacturing activity in the New-York region accelerated more than estimates to 9.53 following an anemic expansion worth 0.6, while the factory growth in the Philadelphia Federal District advanced to 10.3 from 3.6.

The USD/CAD pair could still rise 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.

Friday December 16:

The United States will join the session at 13:30 GMT with the consumer price index for November, where the monthly index could have expanded by 0.1% from the prior drop of 0.1%, while the CPI excluding food and energy monthly index could have also improved by 0.1% from 0.1%, in the time the annual consumer price index is expected to remain unchanged at 3.5%, and finally the CPI excluding food and energy annual index is also projected to linger at 2.1%.

USD/CAD Forecast December 15, 2011, Technical Analysis

USD/CAD rose again on Wednesday as the oil markets absolutely cratered. The selling of oil often will drive the value of the Canadian dollar down, and Wednesday wasn’t any different. The 1.03 level below could offer support at this point as it has been important several times lately. The 1.05 level will more than likely be resistive, and a pullback at this point would be welcomed. The pullback and showing of support at 1.03 has us buying this pair aggressively. We are not willing to sell, and don’t want to buy at this level as it is simply far too overextended at this point.

USD/CAD Forecast December 15, 2011, Technical Analysis
USD/CAD Forecast December 15, 2011, Technical Analysis

Central Bank Actions Dec 14, 2011

Norway’s central bank cut its key policy rate by half a percentage point, to 1.75%, in a bid to dampen the effects of financial market turbulence. Norges Bank said market funding for Norwegian banks has also “become more expensive and less accessible.”

International Monetary Fund, Xinhua Zhu Min, said here today that the European debt crisis by drag, slowing world economic growth, this will make the world’s estimated 27 million people into extreme poverty.

Zhu said, the past five, a series of low-income countries suffer from food crisis, financial crisis, and debt crisis in Europe as well as attacks. Face of the first two crises, as 10 to try to build “policy barriers” reduce the budget deficit, current account deficit and foreign debt, low-income country’s economy is still strong growth in sub-Saharan African countries such as 2010 the average economic growth rate reached 5.4%, the performance is quite good.

The Bank of England director Adam Posen said, the bank may need to expand the size of bond purchase program up to 100 billion pounds (about $ 158 billion) to the UK to support the economic recovery process.

Director Posen said in a speech today: “We should be in the next three years on the secondary market to buy at least 50 billion pounds (about $ 79 billion) debt, mainly tend to buy long term the national debt. In view of the future situation is likely to be due to external developments is expected to become worse, I propose a more ‘quantitative easing’ measures, the amount should be 750 million pounds (about 118.5 billion U.S. dollars), or 100 billion pounds. “

The Reserve Bank of Australia released a report today stating that, Central bank intervention in foreign exchange markets has only short-lived results that are of limited value, according to a report from.

The report reviews each period of intervention by the Reserve Bank of Australia since the nation’s currency was floated in 1983. It says the foreign-exchange market has evolved to where participants are now better equipped to manage their own risk. As a result, intervention has become less frequent and more targeted, and should be reserved chiefly for periods of market dysfunction.

The bank, using regression analysis, also gauges the effectiveness of its past interventions, concluding that the results illustrate the inherent limitations of intervention, which it says policymakers need to be aware of.

The Peoples Bank of China may continue to lower the reserve requirement ratio for banks and even cut interest rates next year, as the government shifts its policy priority toward stabilizing economic growth, the state-run China Securities Journal said in a front-page editorial Thursday.

“The growth rate of its money supply and the new Yuan loans issued by Chinese lenders in 2012 will likely increase moderately from 2011,” the influential financial newspaper wrote.

The editorial was in response to the conclusion Wednesday of the Central Economic Work Conference, a key annual policy setting meeting, during which the country’s top leaders pledged to maintain economic growth and social stability next year amid a deteriorating global economic climate.

The Reserve Bank of India, facing mounting evidence of slowing growth and risks of a spillover from the crisis in Europe, is widely expected to pause its monetary-tightening campaign on Friday.

But the rupee’s slide to record lows and persistent inflation pressures mean that unlike most emerging-markets central banks, the RBI isn’t expected to start cutting interest rates any time soon.

US Federal Reserve reiterated that the fed funds rate at zero to 0.25 percent level at least until mid-2013 the same, in order to stimulate employment and economic recovery in the United States.Announcing that they will continue to sell U.S. short-term government bonds, and buying mortgage-backed securities and reinvest the principal policies to buy more Fannie Mae, Freddie Mac and other institutions to issue agency mortgage-backed securities to help depressed real estate market.

European Central Bankpolicymaker Christian Noyer said on Thursday that a downgrade of France’s AAA credit rating would not be justified and ratings agencies are making decisions based more on politics than economics. may n$

USD/CAD Forecast Dec. 15, 2011, Fundamental Analysis

The USD/CAD pair rebounded to the upside on Wednesday, as pessimism dominated markets once again the outlook for the euro area remains the weakest among its major rivals. There were no breakthroughs on Wednesday to alter the sentiment and investors were spooked after an Italian auction again ended with a new historic borrowing record as the debt crisis inflates.

Italy sold 3.0 billion euros of five-year bonds at an average new record yield of 6.47% rising from the previous auction at 6.29%. The pressure of rising yields keeps the alarm ticking on the debt crisis and the shaping the agony in Italy where investors are just betting it’s a matter of time that it will fall as well.

Merkel urged patience and that Europe will emerge stronger than it is after the crisis that takes hard work yet that did not unwind the pessimism in the market especially following a report about the German Chancellor Angela Merkel expressed her rejection for boosting the European Stability mechanism, according to a report out from Reuters yesterday.

Accordingly, 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 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.

Thursday December 15:

The United States will join the session at 13:30 GMT with the producer price index for November, where the monthly PPI index is expected to expand by 0.2% from the previous drop of 0.3%, while the PPI excluding food and energy monthly index could have expanded by 0.2% from the previous steady reading, in the time the annual PPI index could have remained unchanged at 5.9%, and finally the annual PPI excluding food and energy could have lingered at 2.8%.

The United States will also release the Empire manufacturing index for December, which could have improved to 2.50 from 0.61.

Furthermore, the United States will also provide the initial jobless claims figure (DEC 10), which could have inclined to 390 thousand claims from 381 thousands.

At 14:00 GMT the United States will return with the TIC flows for October, where the net long-term TIC flows previous reading was $68.6 billion, while the total net TIC flows previous reading was 57.4 billion.

At 14:15 GMT the United States will release the Industrial production index for November, where the industrial production index could have expanded by 0.2% from 0.7%, while the capacity utilization index could improve to 77.9% from 77.8%.

At 15:00 GMT the United States will provide markets with the manufacturing index of Philadelphia Federal District, which could have improved to 5.0 from 3.6.

USD/CAD Forecast December 14, 2011, Technical Analysis

USD/CAD continued to run higher during the session on Tuesday, even as the oil markets ran higher at the same time. Normally, the Canadian dollar gets a bid on oil demand. This shows just how “risk off” the market really is at this point in time. The market has broken above the 1.03 level, and this is a signal that we could be making a run towards the 1.05 level again, and perhaps the higher 1.07 level from late September.

We are willing to buy on pullbacks, and will be happy to do so. The 1.02 area looks like the bottom of that support level, and we think this area should give us a supportive candle from which to buy. We are very leery of selling this pair right now as the US dollar is the currency everyone wants to own right now.

USD/CAD Forecast December 14, 2011, Technical Analysis
USD/CAD Forecast December 14, 2011, Technical Analysis

USD/CAD Forecast Dec. 14, 2011, Fundamental Analysis

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%.