US dollar cut earlier gains against its Canadian counterpart on Monday, following the release of a downbeat report on durable goods orders out of the United States. Trade volumes today remained thin, as UK markets were closed for a national holiday.
Having touched a session high at 1.0566 at 9:50 GMT, the pair was trading at 1.0511 at 13:43 GMT, up by 0.07% for the day. Support was expected to be received at August 22nd low, 1.0468, while resistance was to be encountered at August 23rd high and also a six-week high, 1.0567.
Earlier today the Department of Commerce reported that US durable goods orders decreased considerably in the month of July, as demand for aircraft weakened and business investments remained on lower levels. Total durable goods orders dropped by 7.3% to 226.3 billion USD in July, while the median estimate pointed a lesser decrease, by 4.0%. It is common for consumers and business entities to purchase more expensive goods in times when their economic confidence is high. Thus, this abovementioned result in July probably reflects potential signs that US economy is still experiencing weakness. The recorded drop was mainly contributed to by fewer orders in civil aviation, which plunged 52.3% on a monthly basis.
In addition, durable goods orders, excluding volatile components such as goods in the sector of transportation, also decreased, by 0.6% in July compared to June, confounding expectations of a 0.5% increase, while Junes result was revised up to a 0.1% uptick from a flat value previously. Durable goods orders, excluding sector of defense, plummeted 6.7% in July, as experts had anticipated a much lesser drop, by 2.6%.
However, in annual terms, durable goods orders climbed 3.3% in July, while orders, excluding transportation, rose by 2.5%. The annual figure of this indicator is usually considered as lacking seasonal effects.
This set of downbeat data came after on Friday last week the Department of Commerce said that new home sales in the United States decreased significantly to their lowest level in the past nine months in July, giving boost to concerns that rising mortgage rates may obstruct US housing market recovery. Sales of new homes tumbled by 13.4% to reach annual 394 000 units in July compared to June.
Elsewhere, the loonie, as Canadian dollar is also known, was losing ground against the euro, as EUR/CAD cross added 0.06% to trade at 1.4070 at 14:13 GMT, the pairs highest in 22 months.