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Canada Day Lifts the Loonie

H.S. Borji
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Canada Day Lifts the Loonie

The Canadian dollar was higher Tuesday, rebounding against the US dollar and broadening its advances against the Japanese yen.

The Canadian dollar rebounded against its US counterpart, advancing 0.14 percent to 0.9387.

The USDCAD was down 0.13 percent to 1.0654. The trend line shows initial support at 1.0645 and resistance at 1.0697.

The loonie had its three day winning streak against the US dollar snapped Monday after Statistics Canada reported weaker than forecast April GDP figures.

The Canadian economy expanded just 0.1 percent in April, following a similar increase the previous month that capped off a disappointing first quarter. Economists forecast a gain of 0.2 percent.

The slower than forecast gain was due to negative contributions from the goods-producing industries. Goods producers saw their total output decline 0.3 percent in April, as all major sub-sectors except manufacturing posted losses.

Output in the service economy expanded 0.3 percent, led by wholesale and retail trade.

Canada’s economy expanded just 1.2 percent annually in the first quarter, as severe weather weighed on household consumption, business spending and government spending.

In real terms, Canadian GDP accelerated just 0.3 percent between January and March, following a gain of 0.7 percent in the fourth quarter of 2013.

In US data, the manufacturing industry expanded at a strong pace in June, the Institute for Supply Management confirmed today. The ISM manufacturing index remained elevated at 55.3, as 15 of 18 manufacturing industries reported gains.

However, a separate report from the Commerce Department showed construction spending increased only 0.1 percent in May, compared to 0.2 percent the previous month. Economists forecast a gain of 0.5 percent.

The Canadian dollar advanced sharply against the Japanese yen, as the CADJPY climbed 0.33 percent to 95.28. The pair has advanced 0.4 percent since June 26 and more than 1.4 percent over the past four weeks.

The pair faces initial support at 94.75, the ten-day moving average, and resistance at 95.36.

Japan’s manufacturing industry returned to growth in June, as output and new orders expanded for the first time in three months.

The Markit/JMMA Japan manufacturing PMI rose from 49.9 to 51.5, exceeding the initial flash estimate of 51.1.

Separately, the Japan Automobile Manufacturers Association said Japanese vehicle sales declined 0.7 percent in June, following a decline of 5.6 percent the previous month.

Canada had no economic data to report Tuesday as the markets paused to observe the country’s 147th birthday.

On Thursday Statistics Canada will report on international merchandise trade for the month of May.

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