USD/CAD Forecast Dec. 20, 2011, Fundamental Analysis

The USD/CAD pair dropped but rebounded a little following Canada’s wholesale sales index for October, where wholesale sales jumped 0.9 percent from 0.3 percent that was upwardly revised to 0.5 percent for September and better than median estimates of 0.1 percent, however, the pair traded below the opening levels as the US dollar strengthened over the day amid speculation over economical instability in Asia following the death of North Korean leader Kim Jong-il.

As the year nears to end, lights are about to fade around 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 will be mostly concerned about the latest development from the 17-bloc euro area.

Still, The USD/CAD pair could pick up 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.

Tuesday December 20:

Canada will be joining the session data on Tuesday, where we expect that Canada’s consumer price index for November, where Canada CPI is expected to ease at 0.1 percent in November from 0.2 percent, while the core CPI is expected to rest at 0.1 percent from 0.3 percent registered in October.