Forexpros – The U.S. dollar was lower against its Canadian counterpart on Tuesday, despite weaker-than-expected Canadian retail sales data and concerns over the euro zone crisis as improved Chinese manufacturing data boosted sentiment.
USD/CAD hit 1.0158 during early U.S. trade, the session low; the pair subsequently consolidated at 1.0167, shedding 0.22%.
The pair was likely to find support at 1.0130, Monday’s low and resistance at 1.0203, Monday’s high.
Statistics Canada said retail sales advanced by a seasonally adjusted 0.3% in May, missing expectations for a gain of 0.5%, after falling by a revised 0.6% in April.
However, core retail sales, which exclude automobile sales, rose by a seasonally adjusted 0.5% in May, beating expectations for a 0.2% increase.
Risk appetite remained supported following a report showing that China’s HSBC manufacturing purchasing managers index improved to 49.5 in July, its highest level since February, from a final reading of 48.2 in June.
While the index remained below the 50 level which indicates contraction, the improvement from the previous month eased concerns over a slowdown in the world’s second largest economy.
The report offset weak manufacturing data out of the euro zone, but investors remained fearful that Spain will be the next country in the euro zone to require a full-scale bailout after the yield on Spanish 10-year bonds rose to a euro-era high of 7.60%, well above the 7% threshold considered unsustainable if a country is to remain solvent.
The loonie, as the Canadian dollar is also known, was hovering just below a record high against the euro, with EUR/CAD down 0.30% to 1.2309.
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