Forexpros — Last week saw the Canadian dollar pull back from a multi-year high against its U.S. counterpart, weakening amid uncertainty over deadlocked negotiations on raising the U.S. debt ceiling and fears that U.S. economic growth is losing momentum.
USD/CAD hit 0.9406 on Tuesday, a three-and-a-half-year high; the pair subsequently consolidated at 0.9550 by close of trade on Friday, gaining 0.67% over the week.
The pair is likely to find support at 0.9406, Tuesday’s low and a multi-year low and resistance at 0.9635, the high of July 18.
On Friday, the Commerce Department said that U.S. gross domestic product grew at an annual rate of just 1.3% in the second quarter, falling short of expectations for growth of 1.7%. First quarter growth was revised sharply lower to 0.4%, down from 1.9%.
Meanwhile, with only days to go before an August 2 deadline to raise the U.S. debt ceiling, Congressional leaders and the White House had not reached a consensus that would avert a downgrade or default on the nation’s debt.
On Friday, U.S. President Barack Obama urged divided Republicans and Democrats to reach an agreement.
Also Friday, Statistics Canada said Canada’s GDP contracted by 0.3% in May, after remaining flat the previous month. Economists had expected GDP to grow by 0.1% in May.
Meanwhile, crude oil futures fell 4.0% for the week to USD95.52 a barrel. Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead, the dollar looks likely to remain under pressure as investors await progress on a deal to raise the debt ceiling, while Friday’s non-farm payrolls will also be in focus.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 1
In the U.S., the Institute of Supply Management is to publish data on manufacturing activity.
Meanwhile, markets in Canada are to remain closed for a national holiday.
Tuesday, August 2
The U.S. is to publish official data on personal consumption expenditures and personal spending, which is linked to consumer inflation.
Wednesday, August 3
In the U.S., payroll processing firm ADP is publish a report on non-farm payrolls, which leads government data by two days. In addition, the Institute of Supply Management is to publish data on service sector growth, a leading indicator of economic health.
The U.S. is also to publish data on factory orders and crude oil inventories. This data can be a big market mover for the Canadian dollar, due to the size of Canada’s energy sector.
Thursday, August 4
The U.S. is to publish government data on initial jobless claims, a leading indicator of economic health.
Friday, August 5
Canada is to release government data on employment change and the unemployment rate, a leading indicator of economic health. The country is also to release official data on building permits, an excellent gauge of future construction activity, as well as the Ivey PMI.
The U.S. is to round up the week with government data on non-farm payrolls, as well as data on average hourly earnings and the unemployment rate.
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