By FX Empire.com

The USD/CAD pair rebounded to the downside on Thursday, where better than expected data from the U.S. housing and labor sectors overshadowed rising fears from Europe, where housing starts and building permits came out better than forecasts. Nonetheless, the USD/CAD pair losses were limited, as fears continued to dominate markets, as yields on governmental bonds continued to rise in Europe, which reflects mounting concerns among investors that the euro zone debt crisis is worsening.

Housing starts fell by 0.3% in October to 628K, better than median estimates for a drop of 7.3% to 610K, while building permits rose strongly by 10.9% to 653K, compared with median estimates of 603K. Moreover, the weekly jobless claims fell by 5 thousand to 388K, better than median estimates of 395K. Nonetheless, the Philadelphia Fed index continued to expand in November at a slower than expected pace, where the Philly Fed index eased to 3.6 from 8.7 in October.

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 data from Canada on inflation, where the consumer price index will be released and is expected to show that price pressures eased in October. 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.

Friday November 18:

TheUnited Stateswill end the week at 15:00 GMT with the Leading Indicators for October which are expected to improve to 0.5% from 0.2%.

The inflation week continues in theCanadawith the Consumer Price Index for October at 12:00 GMT. The index is expected to ease to 0.1% and on the year to ease to 2.8% from 3.2%. Core CPI is expected is expected to ease to 0.1% and on the year to ease to 1.9% from 2.2%.

Canada will release the Leading Indicators for October which are expected to improve to 0.1% from -0.1%.

Originally posted here