By FX Empire.com
The USD/CAD pair rebounded sharply to the upside on Tuesday after the Bank of Canada announced it will keep the benchmark interest rates unchanged at 1.00% and delivered a grim outlook for economic growth, where the BOC revised their growth projections for 2011 and 2012 lower, while also expecting inflation to ease to 1% by mid 2012, which put the Canadian dollar under huge negative pressure that sent the USD/CAD pair higher.
Moreover, worse than expected housing data and falling consumer confidence in the United States supported demand for lower yielding assets provided the U.S. dollar with bullish momentum. Also, the uncertainty that continues to surround the European debt crisis ahead of Wednesday’s EU summit continued to dominate markets, especially after reports signaled EU finance ministers had canceled their meeting, yet the EU summit will still go as planned.
Traders will continue to monitor the latest developments from Europe, as EU leaders will announce their plans to ease the European debt crisis on Wednesday, and that will be the major market mover for the USD/CAD pair on Wednesday.
Wednesday October 26:
The U.S. will release the durable goods orders for September at 12:30 GMT, where durable goods are expected to fall by 0.7%, compared with the prior drop of 0.1%, while durable goods excluding transportation are expected to rise by 0.5%, compared with the prior drop of 0.1%.
The U.S. will release the new home sales index for September at 14:00 GMT, where new home sales are expected to rise by 1.7% to an annual rate of 300,000 units, compared with the prior estimate of 295,000 units.
The Bank of Canada will release the monetary policy report at 14:30 GMT, where the monetary policy report should provide traders with a better understanding over the recent developments regarding the decision making of the BOC monetary policy stance.
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