USD/CAD trades little changed following US inflation data

The loonie, as the Canadian dollar is known, traded little changed against its US counterpart, after a report that showed the US annual rate of inflation rose less-than-anticipated in November.

Having hit session low at 1.0576 at 09:45 GMT, USD/CAD erased daily declines to trade little changed at 1.0598 at 14:49 GMT, gaining 0.01% for the day. Support was to be received at December 16th low, 1.0573, while resistance was at be encountered at December 13th high, 1.0670.

The greenback was pressured by inflation data, which showed that the annual rate of inflation rose less than expected.

The US Labor Department reported that the consumer price index (CPI) rose 1.2% in November, compared to a year ago, short of analysts estimates of a 1.3% increase. In October the CPI rose by 1.0%. Data also showed that the CPI was flat in November, compared to Octobers 0.1% decline and short of analysts projections of an increase by 0.1%.

Consumer prices, excluding food and energy costs, or core consumer prices, increased 1.7% in November from a year ago, unchanged from October and in line with expectations. Core CPI rose by 0.2% in November from 0.1% in October. Analysts forecast pointed to a 0.1% gain. The Federal Reserve regards that core prices can be a better gauge of longer-term inflationary pressure, because they exclude the volatile food and energy categories. The Feds target usually is to achieve core inflation of 2%.

Meanwhile, official data on Tuesday showed that Canadian manufacturing sales unexpectedly increased to the highest since May 2012.

In its report, Statistics Canada said that manufacturing sales increased by a seasonally adjusted 1% in October, defying expectations for a 0.2% decline. Manufacturing sales rose 0.6% in September. Sales advanced in 13 out of 21 industries, representing 49% of the manufacturing sector. Non-durable goods sales advanced 2.6%, while durable goods sales declined 0.5%.

Yesterday, Statistics Canada reported that foreign investments increased by 4.41 billion CAD, compared to expectations for purchases of 9.24 billion CAD.

The Canadian dollar continued to receive support after Bank of Canada Governor, Stephen Poloz said last week that rates were likely to remain in place for some time, reducing speculation that the slowing inflation may prompt the central banks to cut rates.

Elsewhere, having reached a session high at 1.3782 at 07:50 GMT, EUR/USD declined 0.06% to trade at 1.3754 at 13:03 GMT. Support was likely to be received at December 16th low, 1.3738, while resistance was to be met at December 16th high, 1.3798.