USD/CAD Forecast Dec. 16, 2011, Fundamental Analysis

, as optimism dominated markets following upbeat economic reports from Europe and theUnited States, indicating that the economic recovery is adding stream regardless of the escalating debt woes that have been spreading fears around the markets.

In a busy session for the U.S economy, data from the U.S Department of Commerce showed that jobless claims dropped to 366 thousand from 385 thousand, the lowest level in three years, while manufacturing data came much better than forecasted in December.

A gauge of manufacturing activity in the New-York region accelerated more than estimates to 9.53 following an anemic expansion worth 0.6, while the factory growth in the Philadelphia Federal District advanced to 10.3 from 3.6.

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

Friday December 16:

The United States will join the session at 13:30 GMT with the consumer price index for November, where the monthly index could have expanded by 0.1% from the prior drop of 0.1%, while the CPI excluding food and energy monthly index could have also improved by 0.1% from 0.1%, in the time the annual consumer price index is expected to remain unchanged at 3.5%, and finally the CPI excluding food and energy annual index is also projected to linger at 2.1%.