Forexpros – The U.S. dollar dipped against its Canadian counterpart on Tuesday, after disappointing U.S. retail sales data and amid ongoing concerns over potential downgrades in the European Union.
USD/CAD hit 1.0290 during early U.S. trade, the pair’s highest since November 30; the pair subsequently consolidated at 1.0261, slipping 0.11%.
The pair was likely to find support at 1.0182, Monday’s low and resistance at 1.0362, the high of November 30.
The U.S. Commerce Department said retail sales increased 0.2% after rising by an upwardly revised 0.6% in October, disappointing expectations for a 0.6% gain.
Core retail sales, which exclude automobile sales, rose 0.2% after advancing 0.6% in October. Analysts had expected core retail sales to rise by 0.5% in November.
Market sentiment found support earlier after data showed that the ZEW index of German economic sentiment rose for the first time in ten months in December, confounding expectations for a decline but the report said perceptions of current developments remained on a downward trend.
Also Tuesday, an auction of Spanish government bonds met with solid investor demand, with the Treasury surpassing the targeted amount, selling EUR4.94 billion in 12-month and 18-month bonds.
But concerns over the risk of sovereign rating downgrades across the euro zone persisted after last week’s European Union summit failed to produce concrete plans to resolve the region’s debt crisis.
Meanwhile, the loonie found support as light, sweet crude oil futures for delivery in January traded at USD98.50 a barrel on the New York Mercantile Exchange, rising 0.77%.
Raw materials, including oil account for about half of Canada’s export revenue.
Elsewhere, the loonie was higher against the euro with EUR/CAD retreating 0.13%, to trade at 1.3527.
Later in the day, the Federal Reserve was to announce its federal funds rate.
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