The loonie, as the Canadian dollar is best known, trimmed earlier gains to trade little changed against its US counterpart as economic reports from both countries disappointed.
USD/CAD touched a session low at 1.0941, the pairs weakest since January 20, after which USD/CAD trimmed daily gains to trade little changed at 1.0977 at 14:49 GMT, adding 0.01% for the day. Support was likely to be received at January 20th low, 1.0930, while resistance was to be met at February 13th high, 1.1026.
The loonie trimmed daily advances after Statistics Canada reported today that nations manufacturing sales declined by 0.9% in December, the most since May, confounding analysts estimates of a 0.3% increase. At the same time, Novembers manufacturing sales were revised down to a 0.5% increase from initial estimates of a 1% gain.
The Canadian dollar was pressured yesterday, following a report that showed the nations new housing price index inched up by mere 0.1% in December, short of analysts’ projections for a 0.2% increase and after the index remained flat in November.
Earlier this week, the Canadian Finance Minister presented a budget that revealed a return to surplus next year, easing speculation Bank of Canada would have to take decisive steps to support the nation’s economy.
“There will continue to be a bid on Canada, with a budget like that,” Stefane Marion, the chief economist at National Bank of Canada, said on Wednesday in a Bloomberg interview. “The market was way too aggressive pricing in a rate cut in Canada just a few weeks ago.”
Meanwhile, demand for the US dollar was dampened after a report by the US Federal Reserve revealed that the US industrial output declined by 0.3% in January, the most since April, short of analysts predictions for a 0.2% advance and after a 0.3% increase in the preceding month.
Data by the US Labor Department revealed today that the nations import prices rose 0.1% in January, defying analysts projections for a 0.1% drop and after import prices increased 0.2% in December. However, on year-over-year basis, import prices slumped 1.5% in December, after a 1.3% decline in the previous month.
Greenback’s demand also continued to be pressured after downbeat US reports added to signs of uneven economic recovery.
The US Department of Labor reported yesterday that the number of people who filed for unemployment benefits for the first time unexpectedly increased to 339 000 in the week ended February 8, while analysts projected the number of initial jobless claims will decline to 330 000 from 331 000 in the previous week.
A separate report by the US Census Bureau, revealed the nation’s retail sales dropped by 0.4% in January, the most since June 2012 and after a downward revised 0.1% decrease in the previous month. Analysts had expected the retail sales index to remain flat in January. Retail sales are closely watched, because they provide crucial information regarding the tendency in consumer spending in the United States, which, on the other hand, accounts for about 70% of nation’s Gross Domestic Product.
Elsewhere, EUR/USD touched a session high at 1.3715 at 12:03 GMT, after which consolidation followed at 1.3712, adding 0.23% for the day. Support was likely to be received at February 13th low, 1.3585, while resistance was to be met at January 27th high, 1.3717.
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