The USD/CAD pair fell on Tuesday, as fears eased over the outlook of the U.S. budget after rating agencies Standard & poor’s and Moody’s Investors Service confirmed they won’t downgrade the credit rating of U.S. debt, which overshadowed the slower than expect growth in U.S. GDP, where the U.S. economy expanded in the third quarter by 2.0% down from the prior estimate of 2.5%.
Moreover, Canada released the retail sales index for September, as retail sales rose by 1.0%, above median estimates of 0.5%, while retail sales excluding autos rose by 0.5%, also above median estimates of 0.4%, which provided the Canadian dollar with bullish momentum that pushed the USD/CAD pair to the downside.
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. Traders will be also eyeing the latest developments regarding the budget deficit deal and how U.S. lawmakers will tackle the budget deficit. Moreover, traders will be eyeing the income report, which is expected to show that personal income and spending continued to improve in October, while the University of Michigan confidence index is expected to show slight improvement in November.
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 a flurry of data is due to be released on Wednesday ahead of the Thanks Giving holiday on Thursday, 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 course of this week.
Wednesday November 23:
At 13:30 GMT the United States will join the session with the durable goods figures for October, where durable goods orders could have fallen 1.0% from the previous drop of 0.8%, while durable goods excluding transportation index is expected unchanged, noting that the previous expansion was 1.7%.
The United States will also release the income report at 13:30 GMT, with expectations that the personal income index could have improved 0.3% from 0.1%, while the personal spending index could have expanded by 0.3% from 0.6%. Furthermore, the annual PCE Deflator could have expanded by 2.7% from 2.9%, while the monthly PCE core could have improved 0.1% from the previous zero expansion, in the time the annual PCE core is expected higher at 1.7% from 1.6%.
In addition, the United States will provide markets with the initial jobless claims figure for the 19th of November, where the number of claims could have eased to 385 thousands from 388 thousand.
At 14:55 GMT the United States will end the session with University of Michigan confidence for November in a final reading, where the confidence could have improved slightly to 64.5 from 64.2.
Originally posted here
