The USD/CAD pair extended its gains on Tuesday, as fears from the European debt crisis intensified after yields on governmental bonds rose in Europe, which raised more concerns that the EU debt crisis is worsening and overshadowed the better than expected data from the United States, as investors targeted lower yielding assets, which provided the U.S. dollar with strong bullish momentum against the Loonie.
Data from the United States signaled that inflationary pressures eased in October, as the PPI showed price pressures eased below projections, while retail sales rose above expectations, and the empire manufacturing index showed an unexpected expansion in November, which put some negative pressure on the USD/CAD pair. Nonetheless, the negative impact from Europe continues to dominate sentiment in markets, as traders continued to target lower yielding assets.
Traders will continue to monitor the developments from Europe regarding the debt crisis, where rising yields in Europe suggest investors are concerned amid the uncertainty that is surrounding the outlook of the EU debt crisis. Moreover, traders will be eyeing key data on inflation from the consumer price index, in addition to industrial production data. The USD/CAD pair should still be able to rise if concerns from Europe continue to dominate global markets, but we still expect volatility to continue to dominate trading, and that should also lead to high levels of fluctuations for the USD/CAD pair.
Wednesday November 16:
The inflation week continues in the United States with the Consumer Price Index for October at 13:30 GMT. The index is expected to show a flat reading from a gain of 0.3%, while on yearly basis, CPI is expected to ease at 3.6% from 3.9%. Core CPI is expected is expected to remain at 0.1% in line with September and on the year to rise to 2.1% from 2.0%.
At 14:00 GMT we have September’s TIC flows after Total net TIC Flows rose to $89.6 billion in August.
At 14:15 GMT we have the Industrial Production for October which is expected to rise by 0.4% after 0.2% and Capacity Utilization to rise to 77.6% after 77.4%.
Originally posted here
