Canadian Dollar Strengthens as Building Permits Disappoint
The Canadian dollar was higher Wednesday, as weaker than forecast US payrolls data outweighed declining Canadian building permits.
The Canadian dollar was trading at 0.9037 as of 19:00 GMT. This represents a gain of 11 pips. The technical cross — USDCAD — is trading at 1.1066. The pair is supported initially at 1.1025, followed by 1.0997 and 1.0969. On the upside, resistance is ascending at 1.1102, 1.1130 and 1.1158.
The pair reached a session high of 1.1122 after Markit Group reported the sharpest rise in US service sector output in four months. The Institute for Supply Management confirmed Markit’s findings with its own services gauge, which showed employment growth last month reached the highest level since November 2010.
Weaker than forecast ADP figures kept the US dollar contained Wednesday. The US economy added 175,000 private payrolls in January, just shy of expectations. Official payroll data, courtesy of the Labor Department, are scheduled for release Friday.
In Canada, building permits declined 4.1 percent in December, following a 6.6 percent decrease the previous month, the government’s statistics office reported today. Lower authorizations for commercial buildings and multi-family dwellings in Ontario and British Columbia were largely responsible for the unexpected drop. A median estimate of economists in a Reuters poll called for a 2 percent gain.
The outlook on the Canadian dollar is likely to remain dim for the balance of the year, as the nation’s struggling export market looks to get back on track. Economists at TD Bank forecast the Canadian dollar to fall to 85 cents US later this year before a slight rebound brings it near the 90 cent level in 2015.
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