Forex Pros – Last week saw the Canadian dollar close lower against its U.S. counterpart for the first time in three weeks as oil, the country’s largest export, retreated from recent highs and the Bank of Canada voiced concerns about the “headwinds” the stronger Canadian currency poses for the country’s economy.
USD/CAD hit 0.9669 on Thursday, the pair’s highest since April 5; the pair subsequently consolidated at 0.9591 by close of trade on Friday, gaining 0.42% over the week.
The pair is likely to find support at 0.9541, last Monday’s low and resistance at 0.9669, last Thursday’s high and a seven-day high.
On Tuesday, Canada’s central bank left the benchmark target rate at 1%, where it’s been since September. Policymakers reiterated that further increases would be “carefully considered.” The bank also said that economic growth will slow, with auto production hampered by Japan’s earthquake and exports curbed by the nation’s strong dollar.
Meanwhile, crude oil for May delivery declined 2.8% over the week, the first drop since the period ended March 18.
But the loonie recouped some of the weeks losses after data on Thursday showed that U.S. initial jobless claims rose to a two-month high the previous week.
The greenback continued its slide after a U.S. government report on Friday showed that while consumer price inflation rose 0.5% in March, core CPI, which excludes food and energy prices, rose just 0.1%, less than the expected 0.2% gain.
In the week ahead, investors will be looking towards U.S. government data on building permits and home sales, as well as official data on Canada’s consumer price index.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 18
Canada is to begin the week with government data on foreign securities purchases, which is directly linked to currency demand.
Also Monday, Federal Reserve Bank of Dallas President Richard Fisher is due to speak at two events in Atlanta.
Tuesday, April 19
Canada is to publish official data on consumer price inflation, which accounts for a majority of overall inflation. In addition, the country is to publish government data on wholesale sales, a leading indicator of consumer spending as well as an index of leading economic indicators.
Also Tuesday, the U.S. is to publish government data on building permits, an excellent gauge of future construction activity as well as a report on housing starts, a leading indicator of economic health.
Wednesday, April 20
The U.S. is to publish industry data on existing home sales, a leading indicator of economic health. The country is also to publish a government report on crude oil stockpiles. This data can be a big market mover for the loonie, due to the size of Canada’s crude exports.
Thursday, April 21
The U.S. is to publish official data on initial jobless claims, the nation’s earliest employment data. The country is also to publish data on house prices and natural gas stockpiles. Meanwhile, the Federal Reserve Bank of Philadelphia is to publish an index of manufacturing activity, a leading indicator of economic health.
In addition, Canada is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Friday, April 22
Markets in Canada, the euro zone, Switzerland, the U.K., Australia and New Zealand will be closed for Good Friday.
ForexPros.com
