US dollar advanced to fresh five-month highs against its Canadian rival on Thursday, as a report showed that the deficit on Canadas current account shrank considerably less than projected during the third quarter of the year.
USD/CAD touched a daily high at 1.0598 at 14:00 GMT, also the pairs highest point since July 5th, after which consolidation followed at 1.0595, ticking up 0.01% for the day. Support was likely to be received at November 27th low, 1.0532, while resistance was to be met at July 5th high, 1.0609.
Earlier on Thursday it was reported that the deficit on Canadian current account shrank during the third quarter of the year, due to the lesser deficit, registered on nations trade balance with goods and services and larger business investments. The deficit figure on nations current account amounted to 15.47 billion CAD during Q3, as in Q2 the deficit has been revised down to 15.92 billion CAD from 14.58 billion CAD previously. This revision came as a result of larger payments towards foreign investors. Analysts at Royal Bank of Canada had projected a deficit at the amount of 14.4 billion CAD during the third quarter of the year.
“Very disappointing Canadian current account data,” said Eimear Daly, a currency market analyst at Monex Europe Ltd., by phone from London, cited by Bloomberg News. “A significant downgrade in the second quarter report and then the third quarter report coming significantly below market forecast says there really hasn’t been that shift away from domestic demand and the reorientation to export growth the Bank of Canada is looking for as a signal to hike rates.”
In addition, Canadian industrial production price index (IPPI) was reported to have fallen 0.3% during October, marking a second consecutive monthly drop, as prices of oil and coals decreased. Preliminary estimates pointed a 0.5% decline.
Nations raw materials price index (RMPI) also registered a second monthly drop in October, by 2.3%, or the most considerable rate since June 2012, following a 1.2% drop in September. Lower oil prices contributed the most this result. Experts had expected that the index will slide 2.0% in October.
Canadas economy probably expanded 2.3% during the third quarter of the year compared to the second quarter, following a 1.7% increase in Q2. The official figure is scheduled to be reported at 13:30 GMT on Friday.
Meanwhile, the US dollar received a boost yesterday after a report by Thomson Reuters and the University of Michigan revealed that the final reading of the gauge of consumer sentiment in the United States climbed to 75.1 in November from a final value of 73.2 in October. Expectations pointed an increase to 73.1 in November compared to the preliminary reading of 72.0, published on November 8th, which was also the lowest point since December 2011.
Today trading volumes are expected to remain thin, as markets in the United States are closed for Thanksgiving holiday.
Elsewhere, the loonie, as Canadian dollar is also known, was lower against the euro, with EUR/CAD cross up 0.15% on a daily basis to trade at 1.4412 at 14:45 GMT. GBP/CAD pair was advancing 0.39% to trade at 1.7327 at 14:46 GMT.