Canadian Dollar Strengthens in Subdued Trade
The Canadian dollar was stronger Monday, as a dearth of economic data kept the forex market trading thin ahead of an active week of trade.
As of 19:30 GMT, the USDCAD pair was trading at 1.0962, a loss of 12 pips. The Canadian dollar has experienced a modest resurgence in February, led by brighter prospects in the domestic economy. Rising business confidence, strong employment growth and five consecutive months of broad economic expansion have lowered the possibility of a rate cut.
The USDCAD has declined 1.3 percent since the beginning of the month. The technical indicators point to a bearish market for the pair, which is holding initial support at 1.0960. A breach of this level targets 1.0933, followed by 1.0906. On the upside, technical resistance is ascending at 1.1014, 1.1041 and 1.1069.
Statistics Canada will close out the week with reports on consumer inflation and retail sales. Official data could show consumer inflation rose 1.3 percent annually in January, after hitting 1.2 percent the previous month. Weak inflation growth was a key concern for Canadian policymakers in 2013. Like other advanced industrialized nations, Canada’s inflation rate has been well below the central bank’s target.
Meanwhile, the government report on retail sales could show retail revenues declined 0.5 percent in December, after rising at a rate of 0.6 percent the prior month. Like the United States, eastern Canada battled a colder than normal winter, which could be partly to blame for the subdued growth numbers (should they materialize as expected). As Canada’s economic hub, the eastern province of Ontario accounts for more than one-third of the nation’s total GDP output.
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