The USD/CAD pair rose on Monday as investors headed for low yielding assets and shunned higher yielding ones; despite the lack of economic fundamentals, a huge wave of pessimism moved markets strongly, where China decided on Sunday to increase banks’ reserve requirements for the fourth time this year to control rising inflation risks, while the S&P dropped a bombshell after announcing a downgrade to the outlook of U.S. debt.
Standard & Poor’s downgraded on Monday the outlook for the United States debt to “negative” from “stable”, highlighting the risk that policymakers will fail to reach an agreement on how to reduce the country’s fiscal problems. The S&P also said there’s a one-in-three possibility it could lower the long-term rating for U.S. debt within two years. The S&P meanwhile maintained the AAA rating for the United States.
Investors and traders are worried that rising inflationary pressures will curb demand on oil all around the globe, and accordingly, oil prices dropped today, which also helped in pushing the USD/CAD pair to the upside.
The USD/CAD pair might extend its upside wave over the short-term, nevertheless, we still believe the general trend for the pair will remain to the downside.
Tuesday 11:00, Canada will release the consumer price index will be released for March, where CPI is expected to have continued to rise amid rising energy prices, as the report is expected to show that headline CPI increased by 0.6% on monthly basis, and by 2.8% on yearly basis, while core CPI is expected to increase by 0.2% on monthly basis, and 1.2% on yearly basis.
Tuesday 12:30, Canada will release the leading indicators index for the month of March, where the leading indicators increased in February by 0.8%, and the leading indicators are expected to rise by 0.5% in March.
Tuesday 12:30, Canada will release the wholesale sales index for the month of February, where wholesales sales increased by 1.5 percent in January, but expected to fall by 0.1% in February.
Tuesday 12:30, the U.S. will release the building permits and housing starts, where building permits are expected to rise by 1.1% in March to 540,000 from 517,000 in February, while housing starts are expected to rise by 8.6% to 520,000 from 479,000 in February.
Written by ForexMansion.com