US dollar reached its lowest point in more than one week against the loonie, as Canadas commodity export outlook improved due to Chinese package of economic reforms.
USD/CAD slipped to a session low at 1.0416 at 13:35 GMT, also the pairs lowest point since November 7th, after which consolidation followed at 1.0419, still down 0.18% for the day. Support was likely to be received at November 7th low, 1.0406, while resistance was to be met at November 15th high, 1.0485.
Higher-yielding currencies, such as the loonie, received support, as the Shanghai Composite Index of stocks gained 2.1% and was poised for the highest close since October.
It became clear that China will allow more private investments in state-controlled sectors of the economy, while farmers land rights will be expanded, according to a decision by the Communist Party on November 15th.
At the same time, the average value of new homes in 70 Chinese cities has reached a new record high in October, with demand in the sector remaining stable. In annual terms, home prices in the country rose for a ninth consecutive month in October. Home prices advanced in 69 out of 70 surveyed cities throughout the country in October, or the same tendency as a month ago.
With economic freedoms in worlds second largest economy increasing, the prospects for Canadian commodity exports also improved.
“The backdrop in momentum continues to be constructive and we see it through equities and typically the Canadian dollar is still positively correlated to risk,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada, by phone from Toronto, cited by Bloomberg News. “It could ultimately create more demand for commodities, which could ultimately be positive for the Canadian dollar over time.”
Meanwhile, foreigners have made their largest investments in Canadian securities in five months in September. In addition, the total value of purchased Canadian companies equities has reached a four-year high. Canadians, on the other hand, have diminished their possessions of foreign securities for the first time in four months in September. Foreign investors have purchased Canadian equities at the overall amount of 8.36 billion CAD in September, which exceeded preliminary estimates of 6.71 billion CAD. In August the total amount of domestic equities bought was 2.08 billion CAD.
Elsewhere, the Canadian currency was trading steadily against the euro, with EUR/CAD cross ticking up a mere 0.01% to trade at 1.4099 at 14:19 GMT. GBP/CAD pair was losing 0.23% on a daily basis to trade at 1.6800 at 14:21 GMT.