US dollar retreated to the lowest point against its Canadian counterpart on Monday, after the release of weak manufacturing data out of the United States.
USD/CAD slid to a session low at 1.0281 at 7:00 GMT, the pairs lowest point since August 12th, after which consolidation followed at 1.0300, falling 0.54% for the day. Support was to be received at August 9th low, 1.0273, while resistance was to be met at current session high, 1.0320.
Earlier today it became clear that US industrial production increased in the month of August, as automobile manufacturers and other sectors supported overall industrial activity. This was another signal to suggest that industrial sector in the United States was recovering. Output rose by 0.4% while capacity utilization added 0.2% to reach 77.8% in August. Both indicators met expectations of experts. Manufacturing production, a major component of the wider industrial production indicator, rose by 0.7% in August, completely compensating the 0.4% decrease during the preceding month.
On the other hand, activity in the sector of manufacturing in New York area expanded at a slower rate in September. According to data, published by the Federal Reserve Bank for New York, the index of manufacturing in the region decreased to a reading of 6.29 in September from 8.42 in August. This result confounded preliminary estimates, which pointed an increase to 9.00. During the past four months the index was gaining momentum, after it dropped in April and May. The separate components of the index demonstrated mixed performance. The index of new orders increased to 2.4 in September from 0.3 in August.
Investors increased their risk appetite, after Lawrence Summers withdrew from the contest to replace Ben Bernanke as the next Federal Reserve Chairman. This eased concerns that he would roll back stimulus measures more aggressively than his main contender for the Governor post, Janet Yellen.
Meanwhile, foreign investors appeared to be more willing to purchase Canadian bonds in July, after the record sell off in June. Investors have bought Canadian securities at the net amount of 6.09 billion CAD in July, as bonds comprised about 60% of this number. At the same time, Canadian investors have purchased foreign securities at the net amount of 0.947 billion CAD in July, as most of them were bonds.
Elsewhere, the loonie, as Canadian dollar is also known, was steady against the euro, with EUR/CAD cross increasing 0.05% on a daily basis, to trade at 1.3775 at 14:44 GMT. GBP/CAD pair was gaining 0.10% to trade at 1.6447 at 14:45 GMT.
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