FOREX Watch: USD/CAD rebounds on mixed data
The North American pair rebounded Friday following the release of mixed US and Canadian data. Housing starts and building permits both failed to meet expectations, according to the US Census Bureau. July housing starts were shy of expectations by about 4,000 units, with a reading of 0.896 million. July building permits missed the mark by about 12,000 units, coming in at 0.943 million. In a separate report by the US Department of Labor Statistics productivity was shown to have increased by 0.9 percent in the second quarter, compared to a 1.7 percent decline the previous quarter.
Weak housing and permit data clouded the market’s timetable for Federal Reserve bond tapering, but didn’t stop the US dollar from rebounding. The dollar advanced more than 0.1 percent against a basket of its major competitors to reach 81.29. The dollar’s rebound was led by USD/CAD, which gained 0.3 percent to 1.0336.
The Canadian dollar declined on disappointing manufacturing and international securities flows. June manufacturing shipments declined 0.5 percent, a much lower reading than the anticipated +0.3 percent. Contrary to some reports, declining manufacturing shipments weren’t caused by the Alberta floods, as the province recorded a 0.1 percent gain in June. According to the Canadian Imperial Bank of Commerce, manufacturing weakness originated in Ontario and British Columbia, which experienced declining sales of fabricated metals.
The pair continues to trade within the current neutral range of 1.0250-1.0445. Price charts point to a short- and mid-term consolidation for the pair, but long-term indicators continue to support a bullish trend. An ultimate break above the upper end of the neutral range is favoured. On a technical note, the USDCAD is on a slightly bullish trend, supported initially at 1.0268. On the upside, USDCAD will face resistance at 1.0365, followed by 1.0405.
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