Forex Pros — Last week saw the Canadian dollar post the largest weekly gain against its U.S. counterpart in 20 months, as risk appetite recovered on the back of hopes that Greece averted the euro zone’s first sovereign debt default.
USD/CAD hit 0.9911 on Monday, the pair’s highest since March 17; the pair subsequently consolidated at 0.9582 by close of trade on Friday, tumbling 2.9% over the week.
The pair is likely to find support at 0.9444, the low of May 2 and resistance at 0.9703, last Thursday’s high.
Greece’s parliament approved two bills to authorize a EUR28.4 billion, five-year austerity package needed to secure a EUR12 billion tranche of bailout funds from the European Union and International Monetary Fund.
Had the austerity package been rejected, it could have resulted in the euro zone’s first sovereign debt default, as Greece needs to cover EUR6.6 billion of bonds maturing in August.
Sentiment was also bolstered after German lenders agreed to roll over Greek bond holdings maturing through 2014.
Risk appetite received a further boost as concerns over U.S. growth ebbed on Friday after the Institute for Supply Management said its June manufacturing index came in at 55.3, well above the 51.5 forecast, marking the 23rd consecutive month of growth.
Meanwhile, crude oil, Canada’s largest export, posted its largest weekly gain in almost three months last week, jumping 4% to hit USD94.77 a barrel on the New York Mercantile Exchange by close of trade on Friday.
Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead, the main focus is likely to be on U.S. reports on service sector growth and June non-farm payrolls, while Canada is to publish official data on employment change.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, July 4
Canada is to publish government data on raw material price inflation, a leading indicator of consumer inflation, while markets in the U.S. are to remain closed for Independence Day.
Tuesday, July 5
The U.S. is to publish government data on factory orders, a leading indicator of production.
Wednesday, July 6
The U.S. Institute of Supply Management is to publish a report on service sector growth, a leading indicator of economic health.
Thursday, July 7
n the U.S., payroll processing firm ADP is to publish a report on non-farm payrolls, which leads government data by one day. The U.S. is also to release a weekly report on initial jobless claims, the nation’s earliest economic data and a report on crude oil inventories. This data can be a big market mover for the Canadian dollar due to Canada’s sizeable energy sector.
Meanwhile, Canada is to publish official data on house price inflation, a leading indicator of the housing industry’s health, as well as the Ivey PMI, a leading indicator of economic health.
Friday, July 8
Canada is to release official data on employment change and the country’s unemployment rate, both leading indicators of economic health.
The U.S. is to round up the week with government reports on average hourly earnings, a leading indicator of consumer inflation as well as official data on non-farm payrolls, a leading indicator of economic health and data on the country’s overall unemployment rate.
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