The loonie, as the Canadian dollar is best known, eased off from 4-1/2-year lows against the US dollar, after a government report revealed the Canadian inflation accelerated in December, which added to the outlook that the Canadian economy is gaining momentum.
USD/CAD hit a session low at 11:20 GMT, after which consolidation followed at 1.1062, losing 0.58% for the day. Support was likely to be received at January 27th low, 1.1032, while resistance was to be encountered at January 31st high, 1.1224, also the pairs strongest since July 15th 2009.
Statistics Canada released a report today that showed the Industrial Production Price Index (IPPI) increased by 0.7% in December, after a 0.1% advance in the previous month. Decembers reading was the strongest since March, when the index rose by 1.4%.
A separate report showed the nations Raw Materials Price Index (RMPI) surged by 1.9% in December, capping the highest increase since August. In November the index declined 4.1%. The RMPI is regarded as a leading indicator of consumer inflation, which is a major part of the overall inflation.
Statistics Canada reported on Friday that the Canadian economy expanded at a 0.2% pace in November, matching analysts’ forecasts and marking a fifth straight month of advances. In October the Canadian GDP grew by 0.3%. According to the report, the Canadian economy expanded at an annualized pace of 2.6% in November, in line with analysts’ projections and after in October the GDP of the country rose at an annualized rate of 2.7%.
Following the report, Leslie Preston, an economist with Toronto-Dominion Bank, said in a Bloomberg interview: “With two out of three months now in hand for the fourth quarter, Canada’s economy looks to have built on the solid momentum seen in the third quarter.”
Meanwhile, greenback’s demand continued to be supported after Thomson Reuters in cooperation with the University of Michigan reported on Friday that the final reading of their US consumer confidence index, increased to 81.2 in January, outstripping experts’expectations that pointed to a value of 81.0. The preliminary reading which was released on January 17th was 80.4, while the final value of the index stood at 82.5 in December.
Later today, a report may show that the US manufacturing PMI slowed down to a reading of 56.4 in January from 57.0 in December. The Institute for Supply Management (ISM) is expected to release the official figure at 15:00 GMT today. Better than projected readings will certainly provide support to the greenback.
Elsewhere, GBP/USD reached a session low at 1.6324 at 10:55 GMT, after which consolidation followed at 1.6338, losing 0.6% for the day. Support was likely to be received at January 17th low, 1.6310, while resistance was to be met at January 31st high, 1.6498. The pair settled last month 0.75% lower.