The USD/CAD pair rebounded to the downside last week, as the dollar took advantage of the safety demand amid the undergoing concerns in the euro area.
Also the jobs reports from both Canada and the United States were mixed, as for Canada, the unemployment rose unexpectedly to 7.5% in December from 7.4% in November, where employers added nearly 17.5 thousand jobs, while U.S. employers added 200 thousand jobs, and accordingly the unemployment fell from 8.7% to 8.5%.
This week, the main focus will be on the BoE rate decisions, trade, manufacturing and inflation data from the U.K. while the U.S. will release retail, trade and confidence, as well as other data.
Traders will continue to focus their attention on Europe this coming week, where the European Central Bank is expected to keep its rates unchanged, in order to ease tensions in markets and help support confidence amid the worsening debt crisis in the euro zone region.
Moreover, several euro zone nations are preparing for bond auctions, where all eyes will be focused on the yields and demand on those bonds, noting that the euro area region has more than 157 billion of debt maturing in the first quarter half of 2012.
Overall, we preserve our bullish outlook for the USD/CAD pair, since financial markets conditions continue to suggest that demand for lower yielding assets will remain strong, and that should continue to provide the USD/CAD pair with more bullish momentum. However, positive data could keep the pressure on the pair and push it further to the downside.
Highlights for this week that will probably affect the USD/CAD pair’s direction are:
Monday January 9:
At 20:00 GMT the United States will provide markets with the consumer credit figure for November, which could have narrowed to $7.000 billion from $7.645 billion.
Auctions:
Slovakiawill auction bonds at 10:00 GMT, whileGermanywill auction bonds at 10:15 GMT and finallyFrancewill sell bonds at 14:00 GMT.
Tuesday January 10:
TheUnited Stateswill join the session at 15:00 GMT with the wholesale inventories index for November, which could have expanded by 0.5% from the previous expansion of 1.6%.
Auctions:
Netherlandswill sell bonds at 09:00 GMT.
Austria,MaltaandGreecewill auction bonds at 10:00 GMT.
Sloveniawill auction bonds at 12:00 GMT.
Wednesday January 11:
The Federal Reserve will provide markets with the Beige Book at 19:00 GMT.
Auctions:
Germanywill sell bonds at 10:15 GMT.
Thursday January 12:
The United States will join the session at 13:30 GMT with the retail sales index for December, where the advanced index is expected to expand in a steady pace by 0.2%, while the retail sales index less autos is projected to expand by 0.3% from 0.2%.
The United States will also release the initial jobless claims (Jan 7), where the prior reading was 372 thousand claims.
At 15:00 GMT theUnited Stateswill provide markets with the business inventories index for November, which could have grown by 0.4% from 0.8%.
At 19:00 GMT theUnited Stateswill end the session with the monthly budget statement, which is expected at -$79.0 billion.
Auctions:
Spainwill auction bonds at 09:30 GMT, whileItalywill auction bonds at 10:00 GMT
Friday January 13:
The United States will join the session at 13:30 GMT with the import price monthly index for December, which is expected to drop by 0.1% from the previous expansion of 0.7%.
TheUnited Stateswill also provide the trade balance figures for November, where the trade deficit is expected to widen to $44.9 billion from $43.5 billion.
Canada will release the international merchandise trade balance for November at 13:30 GMT, where the trade deficit is expected to widen to 0.45 billion CAD from the prior deficit of 0.89 billion CAD.
Auctions:
Italywill auction bonds at 10:00 GMT.
Originally posted here
