USD/CAD Continues Lower Amid Prevailing US Dollar Weakness
The USDCAD declined further on Friday and was trading at daily lows in the North American session, as investors continued to reduce their bets on the US dollar following disappointing retail sales and consumer confidence data.
The USDCAD bottomed out at 1.2439 on Friday. It would subsequently consolidate at 1.2439, declining 0.58 percent. The pair faces immediate support at 1.2416 and resistance at 1.2681.
The greenback is in the midst of a two-day skid triggered by disappointing retail sales figures. US retail sales declined 0.8 percent in January, following a 0.9 percent drop in December, the Commerce Department reported on Thursday. So-called core sales, which strip away volatile goods and are more closely aligned with the consumer spending component of GDP, rose only 0.1 percent.
Thursday’s data suggested the US economy was off to a slow start in 2015 after expansion cooled in the final stretch of last year. US gross domestic product expanded just 2.6 percent annually in the fourth quarter, half the rate of the previous quarter. Economists expect the government to revise its fourth quarter GDP estimate to as low as 1.7 percent. The Commerce Department will post a revised estimate later this month.
In other data, US consumer confidence declined in February after reaching an 11-year high at the start of the year. The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 93.6 from a final January reading of 98.1. A median estimate of economists called for no change in February.
The survey’s gauge of expectations decreased to 87.5 from 91 in January. The barometer of current conditions declined to 103.1 from 109.3.
Inflation expectations increased from January. Americans expect inflation to reach 2.8 percent in the next year, up from 2.5 percent a month earlier, survey data showed.
Rising gas prices dampened consumer sentiment in February. Americans were also more concerned about the labour market after hearing about layoffs in the oil and gas sector. Overall, hiring remained robust in January, as employers added 257,000 private payrolls.
Energy futures rose again on Friday, with Brent crude surpassing $60 a barrel. The global benchmark rose 3.7 percent to $61.50 a barrel.
US crude for March delivery (WTI) climbed 3.9 percent to $54.19 a barrel.
In Canadian data, manufacturing sales rebounded sharply in December, despite a nearly-double-digit plunge in energy sales.
Canadian manufacturing sales rose 1.7 percent in December after declining 1.3 percent in November, the federal statistics agency reported today in Ottawa. A median estimate of economists called for a 1 percent rebound in December.
In total, sales increased in 17 of 21 industries representing nearly 80 percent of total manufacturing. Excluding petroleum and gas products, which fell 9.3 percent, manufacturing sales were up 3.2 percent, official data showed. Machinery sales climbed 5.2 percent, reaching the highest level since November 2011.
On a regional level, sales advanced in seven of Canada’s ten provinces, led by Ontario, Quebec and British Columbia.
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