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North American Pair Falls on Income Data

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North American Pair Falls on Income Data

The North American pair was lower today, after mixed US financial data spurred an unexpected rebound from the Canadian dollar.

The USDCAD pair set a fresh four-year high, hitting 1.224 in the early morning session. The pair would later fall after the Commerce Department said personal incomes were unchanged in December, despite stronger than forecasted spending. The lack of wage growth will probably make it difficult for consumers to sustain higher levels of spending over a prolonged period.

The lack of wage growth may have weighed on consumer confidence this month. The Thomson Reuters/University of Michigan consumer sentiment index regressed from 82.5 to 81.1 in January, following the biggest monthly gain in three years.

In Canada, real domestic product expanded 0.2 percent in November, following a gain of 0.3 percent the previous month. While the slowdown in November was not unexpected, economists are concerned December data will show a more pronounced downtrend. Severe weather in December could even result in economic activity declining marginally, according to some market voices. November was the fifth consecutive month Canada’s GDP expanded.

As of 8:00 PM GMT, the USDCAD was trading at 1.1124, a loss of 38 pips. The pair is up more than half a percent this week and more than 5 percent since the start of the year. With the Federal Reserve deciding this week to continue the tapering process, the pair is poised to test 1.15 for the first time since July 2009.

In technical terms, the pair’s immediate support is found at 1.1103. On the upside, resistance is ascending at 1.1183, 1.1211 and 1.1239.

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