By FX Empire.com

The USD/CAD pair extended its losses on Monday amid reports EU leaders are discussing strong measures to ease the European debt crisis, which pushed the U.S. dollar sharply lower against major currencies, providing the Canadian dollar with strong momentum to push the USD/CAD pair to the downside as a result.

Fears from Europe eased over the weekend after a report suggested the International Monetary Fund was working on a plan to help Italy, although the IMF denied any negotiations with Italy. Nonetheless, traders were optimistic that EU leaders are working on drastic measures to ease mounting concerns in markets over the outlook of the European debt crisis.

Moreover, the new home sales index was released from the United States for October, where new home sales rose by 1.3% to an annual rate of 307,000 units, compared with the prior estimate of 303K, but below median estimates of 315,000 units.

Traders will continue to monitor the developments from Europe regarding the debt crisis, where rising yields in Europe suggest investors are concerned amid the uncertainty that is surrounding the outlook of the EU debt crisis. The EU finance ministers will meet on Tuesday in Brussels, where expectations signal that they will announce details of their plan to increase the firepower of the European Financial Stability Facility EFSF fund.

The USD/CAD pair should still be able to rise if concerns from Europe continue to dominate global markets, but we still expect volatility to continue to dominate trading, as uncertainty remains the dominant theme in markets, and that could also lead to high levels of fluctuations for the USD/CAD pair. But overall, we expect the pair to extend its gains over the coming period.

Tuesday November 29:

Canada will release the current account for the third quarter at 13:30 GMT, where the current account deficit is expected to narrow to 11.1 billion CAD, compared with the prior deficit of 15.63 billion CAD.

TheUnited Stateswill join the session at 14:00 GMT with the S&P/CS 20 report for September, where the monthly S&P/CS 20 City index is projected to remain steady compared with the previous drop of 0.05%, in the time the annual S&P/CS composite-20 could have dropped 3.00% from the previous drop of 3.80%.

At 15:00 GMT theUnited Stateswill announce the consumer confidence for November, with expectations it could have improved to 44.4 from 39.8.

Originally posted here