The USD/CAD pair dropped on Tuesday, despite the fears that continued to dominate global financial markets over the outlook of the European debt crisis after rating agency Standard & Poor’s announced it could downgrade the credit rating of 15 euro zone countries including Germany and France. Standard & Poor’s also signaled it could downgrade the credit rating of the European Financial Stability Facility EFSF.
Meanwhile, the Bank of Canada left the benchmark interest rates unchanged at 1.00% in line with median estimates, where the BOC signaled that the European debt crisis could weigh down on global economic growth. Nonetheless, the BOC signaled that rising economic activities in the United States represent a good sign for the outlook, since the United States is indeed Canada’s largest trading partner. Canada also released the Ivey PMI for November, which rose to 59.9, better than median estimates of 55.5, which also provided the Canadian dollar with some bullish momentum that pushed the USD/CAD pair to the downside.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where the focus will turn to the EU summit, as European leaders continue their efforts to find a resolution to the debt crisis.
The USD/CAD pair could still further on Wednesday, but we still expect volatility to continue to dominate trading, as uncertainty remains the dominant theme in markets, and that could also lead to high levels of fluctuations for the USD/CAD pair.
Wednesday December 7:
The United States will join the session at 20:00 GMT with the Consumer Credit figure for October, which could have declined to $7.000 billion from $7.386 billion.
Originally posted here
