By FX Empire.com
The USD/CAD pair rebounded to the downside last week in volatile trading amid the high level of uncertainty that is surrounding the outlook of the European debt crisis, as fears and rising debt concerns dominated investors after the G20 summit failed to quell jitters and provide clear decisions to aid the euro-area and prevent the crisis from spreading into other larger economies within the region.
Meanwhile, economic data from the United States showed strong progress, however, markets were focused on the Trade Balance for September, where the trade deficit narrowed from $44.9 to $43.1 billion.
Meanwhile, data from Canada proved to be strong as well, the trade balance was released from Canada with a surplus of 1.25 billion Canadian dollars, while the Canadian housing starts rose in October to 207.6 thousand, compared with the median estimates of 195.0 thousand.
Traders are likely to eye-lock next week to adjust their positions as the will surely unfold more data over Europe and the United States, where the retail sales report will be released from both Europe and the United States.
The high level of uncertainty in markets could provide the USD/CAD pair with more bullish momentum, where traders will be eyeing developments in Greece and Italy, 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 momentum.
Highlights for this week that will probably affect the USD/CAD pair’s direction are:
Monday November 14:
We don’t have news from the United States and Canada, and accordingly, traders will be focused on the developments from Europe.
Tuesday November 15:
The U.S. economy will start the data at 13:30 GMT with the Producer Price Index for October which is expected with 0.1% drop after 0.8% rise and on the year to ease to 6.3% from 6.9%. Excluding food and energy it is expected with 0.1% rise from 0.2% and on the year to rise to 2.9% from 2.5%.
Also at the same time we have the Retail Sales Index for October which is expected to slow with 0.3% gain after 1.1% surge and excluding autos to rise 0.2% after 0.6% rise in September.
As for the Empire Manufacturing Index for November it is expected to ease the contraction to -2.30 from -8.48.
At 15:00 GMT the Business Inventories for September are due and expected to slow to 0.2% from 0.5% previous rise.
Canada will release the manufacturing sales index for September at 13:30 GMT, where manufacturing sales are expected to rise by 0.1%, compared with the prior estimate of 1.4% in August.
Wednesday November 16:
The inflation week continues in the United States with the Consumer Price Index for October at 13:30 GMT. The index is expected to show a flat reading from a gain of 0.3%, while on yearly basis, CPI is expected to ease at 3.6% from 3.9%. Core CPI is expected is expected to remain at 0.1% in line with September and on the year to rise to 2.1% from 2.0%.
At 14:00 GMT we have September’s TIC flows after Total net TIC Flows rose to $89.6 billion in August.
At 14:15 GMT we have the Industrial Production for October which is expected to rise by 0.4% after 0.2% and Capacity Utilization to rise to 77.7% after 77.4%.
Thursday November 17:
The U.S. data will start at 13:30 GMT with the housing starts for October which is expected to drop to 610 thousand from 658 thousand and Building Permits on the other hand to rise to 600 thousand from 594 thousand.
At the same time we have the weekly jobless claims for the week ending November 11 after last week they unexpectedly declined to 390 thousand.
The data will end with the Philadelphia Fed Index for November at 15:00 GMT which is expected to improve to 10.0 from 8.7.
Friday November 18:
The United States will end the week at 15:00 GMT with the Leading Indicators for October which are expected to improve to 0.5% from 0.2%.
The inflation week continues in the Canada with the Consumer Price Index for October at 12:00 GMT. The index is expected to ease to 0.1% and on the year to ease to 2.8% from 3.2%. Core CPI is expected is expected to ease to 0.1% and on the year to ease to 1.9% from 2.2%.
Canada will release the Leading Indicators for October which are expected to improve to 0.1% from -0.1%.
Originally posted here
