US dollar rose to its highest point in two weeks against the Canadian counterpart on Thursday, following the release of the weekly report on initial jobless claims and the trade balance data out of the United States, while the Royal Bank of Canada stressed on the need for future raise in the interest rates, something which had been into consideration for over a year, as risks of a deteriorating economy rose.
USD/CAD hit a session high at 1.0417 at 12:45 GMT, also the pairs highest point since October 10th, after which consolidation followed at 1.0413, gaining 0.27% for the day. Support was likely to be received at October 13th low, 1.0358, while resistance was to be encountered at October 10th high, 1.0419.
The US Department of Labor said today that the number of people who filed for unemployment assistance in the country decreased by 12 000 to reach 350 000 during the week ended on October 19th 2013, as technical difficulties in data processing in California still distorted overall results. Preliminary estimates pointed that the number of initial jobless claims will drop to 340 000, while preceding weeks results have been revised up to 362 000 from 358 000 previously. The average number of claims during the past four weeks, an indicator considered as lacking seasonal effects, increased by 10 750 to 348 250 claims, or the highest number since the beginning of July. Initial jobless claims climbed to a six-week high three weeks ago, namely due to the above mentioned technical problems.
A separate report made clear that the United States registered a slightly wider deficit on its trade balance in August compared to July. US export and import figures remained almost unchanged in August, implying a slower pace of global economic recovery and also a weaker demand by domestic consumers. Exports ticked down 0.1% in August compared to July to reach the seasonally adjusted 189.22 billion USD, while imports remained unchanged at 228.02 billion USD. As a result, the US trade deficit climbed 0.4% to reach 38.803 billion USD in August. Julys deficit figure has been revised up to 38.642 billion USD from 39.147 billion USD previously. Analysts had projected a larger deficit in August, at the amount of 39.300 billion USD. US exports decreased, because of a drop in exported industrial goods in August. At the same time, exported automobiles and consumer goods from the US increased during the same month.
Meanwhile, the loonie, as Canadian dollar is also nicknamed, lost ground against the greenback, after Royal Bank of Canada said that inflation rate will remain below the 2% objective until the end of 2015, or two quarters longer than forecast in July, with the risks of continuing weakness taking on “increasing importance.”, Bloomberg imparted. At its policy meeting yesterday the central bank decided to leave the benchmark interest rate unchanged at the record low level of 1.0%. The bank also revised down its outlook for nation’s economic growth in 2013 to 1.6% from 1.8% in July, as “uncertain global and domestic economic conditions” caused impact on economic activity.
Elsewhere, the Canadian currency was lower against the euro, with EUR/CAD cross advancing 0.50% on a daily basis to trade at 1.4378. GBP/CAD pair was rising 0.16% to trade at 1.6814.
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