Forexpros – The U.S. dollar trimmed losses against its Canadian counterpart on Tuesday, as risk aversion escalated after talks aimed at forming a coalition government in Greece failed, sending the country to fresh elections.
USD/AD pulled back from 0.9989, the pair’s lowest since Friday, to hit 1.0024 during early U.S. trade, down just 0.11% on the day.
The pair was likely to find support at 0.9989, the session low and resistance at 1.0051, Mondays high.
The greenback found support after Panos Kammenos, the leader of a conservative party which opposes Greece’s international bailout deal, said cross party talks aimed at forming a coalition government had ended without a deal.
A caretaker government will be appointed Wednesday, with new elections likely in early June, adding to fears over a potential Greek default and eventual exit from the euro zone.
Earlier in the day, market sentiment firmed up after preliminary data showed that Germany’s economy expanded more-than-expected in the first quarter, indicating that the euro zone’s largest economy is weathering the effects of the crisis in the region.
In the U.S., official data showed that retail sales inched up 0.1% in April, disappointing expectations for a 0.2% gain and growing at the weakest pace in four months.
Meanwhile, U.S. consumer prices, including food and energy costs, were flat last month for the first time since December.
A separate report showed that an index of manufacturing activity in New York jumped to 17.1 in May from 6.6 in April. Analysts had expected the index to rise to 8.5 in May.
The loonie, as the Canadian dollar is also known, was higher against the euro, with EUR/CAD shedding 0.29% to hit 1.2832.
Also Tuesday, official data showed that the euro zone avoided a recession in the first quarter, as economic growth remained flat, defying expectations for a contraction of 0.2%. The euro zone economy contracted by 0.3% in the fourth quarter of 2011.
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