USD/CAD Daily Fundamental Analysis for July 28, 2011

The USD/CAD pair rose back on Wednesday after falling to the lowest level since November 2007 on Tuesday, as the U.S. dollar gained back momentum against major currencies, albeit U.S. lawmakers continue to debate over a deal to raise the debt ceiling and reduce the swelling deficit, where rising pessimism around the globe pushed investors away from risky assets, which weighed down on the CAD, and pushed the USD/CAD pair higher.

Moreover, crude oil prices fell on Wednesday after the EIA report showed crude oil inventories rose last week above expectations, which put negative pressure on the CAD, and provided the USD/CAD pair with bullish momentum.

The U.S. debt ceiling plan will continue to dominate markets, and it seems that the U.S. dollar will remain weak so long as U.S. lawmakers fail to reach an agreement to raise the debt. Moreover, data from the United States is due tomorrow, although we don’t expect the pair to change its bearish trend.

Thursday July 28:

At 12:30 GMT we have the weekly jobless claims after they rose unexpectedly last week by 418,000.

At 14:00 GMT the Pending Home Sales for June are due and expected with 2.0% drop following 8.2% surge in May.