By FX Empire.com
The USD/CAD pair rebounded to the upside on Thursday amid rising risk aversion in markets, where worse than expected data from China raised concerns over the outlook for global growth, which put commodities under negative pressure. Moreover, traders were anxious ahead of a bond auction by Italy, where traders worry that demand will be weak amid jitters from the European debt crisis, which weighed down on confidence levels and put higher yielding assets including the Canadian dollar under pressure, which sent the USD/CAD pair to the upside.
Traders will continue to monitor the latest developments from Europe, and if pessimism continues to dominate markets, we should expect the USD/CAD pair to extend its gains on Friday. Nonetheless, if some progress is made in Europe, demand for higher yielding assets will improve and that will put the USD/CAD pair under pressure.
Friday October 14:
Canada will release the manufacturing sales index at 12:30 GMT, which is expected to have risen in August by 0.4% compared with 2.7% in July.
The U.S. economy will end the week with heavy data starting at 12:30 GMT with the September Retail Sales as the index is expected to rise moderately by 0.2% less autos after 0.1% gain in August and excluding gas and auto sales are also expected with 0.2% rise after 0.1%.
At 13:55 GMT the University of Michigan confidence for October is expected with a rise to 60.0 from 59.4; and finally at 14:00 GMT, Business Inventories for August are expected to hold at 0.4%.
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