USD/CAD Forecast Dec. 22, 2011, Fundamental Analysis

The USD/CAD pair pared earlier losses, where the dollar strengthened after the European Central Bank offered more than expected loans for the euro-area banks, mirroring the worsening impact of the debt crisis on European lenders, in addition, Canada released its retail sales figures which came better than forecast.

As the year nears to end, lights are about to fade upon the financial markets, where will accordingly see low volumes and limited trading as well before Christmas holiday. The sentiment will start to shape as investors stay cautious ahead of the New Year’s but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The USD/CAD pair could still rise if pessimism continues to dominate markets, but we still expect volatility to dominate the scene, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Thursday December 22:

The Canadian economy won’t be joining the session due to lack of economic fundamentals from Canada on Thursday, so eyes will be locked on the euro zone and the US for more for data that could majorly affect the Canadian dollar.