Forexpros – The U.S. dollar ended the week higher against its Canadian counterpart on Friday, as markets were jittery amid concerns over Greece’s debt woes but gains were limited by hopes of progress in the coming week.
USD/CAD hit 1.0019 on Wednesday, the pair’s highest since February 16; the pair subsequently consolidated at 0.9991 by close of trade on Friday, adding 0.62% over the week.
The pair is likely to find support at .9952, the low of February 16 and resistance at 1.0025, the high of February 14.
Investor confidence slightly improved earlier in the week after euro zone finance ministers agreed to deliver a EUR130 billion bailout package to Greece. However, Eurogroup Chairman Jean-Claude Juncker said on Friday that he could not rule out that Athens may need a third bailout.
But the Canadian dollar remained supported after Greece launched a bond-swap offer to private-sector creditors, formally inviting them to exchange their holdings of government debt for new securities.
The loonie also found support as light sweet crude futures for delivery in April settled at USD109.70 a barrel by close of trade on Friday on the New York Mercantile Exchange, rallying 4.95% over the week.
Raw materials, including oil account for about half of Canada’s export revenue.
Meanwhile, markets were also eyeing the European Central Bank, scheduled to launch a second liquidity operation next week, offering unlimited three-year loans to European lenders, after the bank carried out a similar successful operation in December.
Speaking on the sidelines of a meeting of finance ministers and central bankers from the Group of 20 nations, Bank of Canada Governor Mark Carney said that restoring stability and growth in the euro zone will not be sufficient to help the global economy out of crisis and leaders must reinforce the coordination of policy on a global level.
In the U.S., a string of improved economic data lifted sentiment. A report by the University of Michigan on Friday showed that its index consumer sentiment rose to 75.3 this month from 75 in January.
On Thursday, the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending February 18 held steady at 351,000, the fewest since March 2008.
Earlier in the week, official data showed that core retail sales in Canada were unexpectedly flat in December, disappointing expectations for a 0.1% rise after a 0.4% increase the previous month. Retail sales fell 0.2% in line with expectations.
The weak retail sales data was offset by a report showing that wholesale sales rose more-than-expected in December, adding 0.9% after a 0.3% fall the previous month.
In the coming week, markets will be watching developments in the euro zone, with investors eyeing the uptake on Wednesday’s refinancing operation by the ECB, as well as the outcome of votes in Finland and Germany on Greece’s bailout.
Investors will also be focusing on Wednesday’s U.S. data on fourth quarter economic growth, in order to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, February 27
Later in the day, the U.S. is to publish industry data on pending home sales, a leading indicator of economic health.
Tuesday, February 28
Later Tuesday, the U.S. is to produce official data on durable goods orders, a leading indicator of production, followed by industry data on house price inflation and consumer confidence.
Wednesday, February 29
The U.S. is to release a preliminary report on fourth-quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to report on manufacturing activity in the Chicago area.
Also Wednesday, Federal Reserve Chairman Ben Bernanke is due to testify on the semi-annual monetary policy report before the House Financial Services Committee in Washington.
Thursday, March 1
Canada is to produce official data on the country’s current account and on raw materials price inflation, a key indicator of consumer inflation.
The U.S. is to release government data on unemployment claims as well as personal consumption expenditures and personal spending.
Meanwhile, the Institute for Supply Management is to produce a report on manufacturing activity. In addition, Fed Chairman Bernanke is due to testify for a second day before the Senate Banking Committee.
Friday, March 2
Canada is to round up the week with an official data on the country’s GDP.
Forexpros
