USD/CAD Daily Fundamental Analysis for August 03, 2011

The USD/CAD pair extended its gains on Tuesday, as pessimism continued to dominate investors all around the globe, where fears from the European debt crisis spreading to Italy and Spain fueled worries, as yields on Spanish and Italian governmental bonds rose to the highest level in 14 years, while a disappointing income report from the United States also raised concerns over the outlook for growth, as well as the outlook for growth in Canada, since the United States is Canada’s largest trading partner, and that put huge downside pressures on the CAD, and pushed the USD/CAD pair accordingly to the upside.

The focus in markets will now turn to the outlook for growth, as recent signs suggest economic growth is slowing in both the United States and Canada, while traders will be eyeing data from the U.S. labor market, as the ADP employment report will be released on Wednesday, and traders will be eyeing the recent developments in the U.S. labor market, and if the data proves disappointing, we should expect the USD to gain more momentum and rise against the CAD, which means that the USD/CAD pair will probably extend its rise over the coming period.

Wednesday August 03:

The United States will start with the ADP employment change for the month of July at 12:15 GMT, where the ADP employment report is expected to show that U.S. private employers added 110,000 jobs in July, compared with 157,000 added jobs back in June.

At 14:00 GMT we have the ISM services index for the month of July, where the ISM services index is expected to expand to 54.0, compared with 53.3 back in June.

At 14:00 GMT, factory orders will be released for the month o June, where factory orders are expected to rise by 0.4%, compared with 0.8% in May.