Forexpros – The U.S. dollar was almost unchanged against its Canadian counterpart on Friday, as markets were jittery amid renewed concerns over the debt crisis in the euro zone.
USD/CAD hit 1.0182 on Friday, the pair’s lowest since December 9; the pair subsequently consolidated at 1.0206 by close of trade on Friday, tumbling 1.55% over the week.
The pair was likely to find support at 1.0166, the low of September 9 and resistance at 1.0279, the high of December 22.
Trading volumes remained thin ahead of the Christmas holiday weekend, resulting in quiet trade.
Investors were cautious on Wednesday after an unprecedented EUR489.19 billion three-year loan by the European Central Bank.
Markets were hoping the move would avoid a credit crunch in the euro zone and help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the single currency bloc.
But the loonie remained supported after official data showed that Canadian retail sales rose by a seasonally adjusted 1.0% in October, more than doubling expectations for a 0.4% gain.
Core retail sales, which exclude automobile sales, rose by a seasonally adjusted 0.7% in October, exceeding expectations for a 0.4% increase.
Market sentiment improved on Thursday after a report by the University of Michigan’s said its index of overall consumer sentiment rose to 69.9 in December, exceeding expectations for a rise to 68.2, while a separate report showed that the number of people who filed for unemployment assistance in the U.S. in the week ending December 16 fell to the lowest level since April 2008.
The data came after the Bureau of Economic Analysis said gross domestic product increased at a seasonally adjusted annual rate of 1.8% during the third quarter, down from a previous estimate of 2.0%.
The data primarily reflected a downward revision to personal consumption, which grew 1.6% compared to a previous estimate of 2.3%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
Investor confidence also after strengthened official data showed on Friday that U.S. home sales rose more-than-expected in November. A separate report showed that U.S. core durable goods orders also rose-more-than-expected last month, advancing 3.8% from 0.0% in October.
But markets remained jittery amid sustained worries over possible mass downgrades in the euro zone.
Also Friday, a report by Statistics Canada said that GDP remained unchanged unexpectedly at 0.0% in November, from 0.2% the previous month. Analysts had expected GDP to rise 0.1% in November.
Meanwhile, the loonie also found support as light sweet crude futures for delivery in February traded at USD99.86 a barrel by close of trade on Friday on the New York Mercantile Exchange, rallying 6.16% over the week, the biggest weekly gain since late October.
Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Meanwhile, the U.S. is to release key reports on consumer confidence, jobless claims and home sales.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, December 26
Markets in the U.S. and Canada will be remaining closed for the Boxing Day holiday.
Tuesday, December 27
Markets in Canada will be remaining closed for a post-Christmas bank holiday.
The U.S. is to publish industry data on house price inflation, a leading indicator of demand in the housing market. The U.S. is also to release data on consumer confidence and manufacturing activity in Richmond.
Wednesday, December 28
The U.S. is to release the treasury currency report.
Thursday, December 29
The U.S. is to publish its weekly government report on initial jobless claims, as well as industry data on pending home sales, a leading indicator of economic health. The U.S. is also to release and industry data on business conditions in the Chicago area, a leading indicator of economic health, and official data on crude oil stockpiles. The data can be a big market mover for the loonie due to the size of Canada’s energy sector.
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