Forexpros – The U.S. dollar edged lower against its Canadian counterpart on Friday, to end the week almost unchanged, as speculation over the possibility of monetary easing from the Federal Reserve dampened demand for the greenback.
USD/CAD hit 1.0255 on Friday, the session high; the pair subsequently consolidated at 1.0212 by close of trade, down just 0.05% on the week.
The pair is likely to find support at 1.0137, the low of May 18 and resistance at 1.0324, Tuesday’s high and the week’s high.
Sentiment on the greenback was weighed by growing expectations that the U.S. central bank may announce fresh stimulus measures following its meeting next week, after a recent string of weak economic data.
Data on Friday showed that U.S. consumer sentiment fell to a six-month low in June, fuelling concerns that economic growth is faltering. Separate reports showed that an index of manufacturing activity in New York dropped sharply in June, while U.S. manufacturing output fell in May for the second time in three months.
In Canada, official data showed that factory sales unexpectedly dropped 0.8% in April to CAD49.11 billion, following a strong 1.9% gain in March.
Demand for riskier assets was also supported by expectations that world central banks would implement measures to calm market turmoil following Sunday’s elections in Greece, which may determine if the country remains in the euro zone.
On Friday, the European Central Bank said it would continue to supply liquidity to banks as necessary, one day after the Bank of England announced an emergency liquidity package to support the U.K. banking system.
Meanwhile, concerns over elevated Spanish and Italian borrowing costs lingered on Friday, despite efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on a EUR100 billion aid package for Spanish banks.
The yield on Spanish 10-year bonds eased back to settle at 6.87% on Friday, but remained close to the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.
In the week ahead, investor sentiment is likely to be decided by the outcome of Sunday’s elections in Greece, while a G-20 summit due to start Monday may produce fresh measures to combat the crisis in Europe.
Meanwhile, market participants will be closely watching the outcome of the Federal Reserve’s monetary policy meeting on Wednesday.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 18
Canada is to release official data on foreign security purchases. In addition, leaders from the Group of 20 nations are to begin a two-day summit in Mexico.
Tuesday, June 19
Canada is to produce official data on wholesale sales, a leading indicator of consumer spending.
The U.S. is to publish official reports on building permits, an excellent gauge of future construction activity, as well as data housing starts, a leading indicator of economic health.
Meanwhile, leaders from the Group of 20 nations are to hold a second day of talks at a summit in Mexico.
Wednesday, June 20
The Federal Reserve is to announce its benchmark interest rate and publish its rate statement and economic projections. The data is to be followed by a press conference with Fed Chairman Ben Bernanke to discuss the monetary policy decision.
The U.S. is also to release government data on crude oil stockpiles. This data can be a big market mover for the Canadian dollar due to the size of the country’s energy sector.
Thursday, June 21
Canada is also to release official data on retail sales, the primary gauge of consumer spending, as well as a report on industrial order expectations.
The U.S. is to produce government data on unemployment claims, followed by preliminary data on manufacturing activity and an industry report on existing home sales. The country is also to release data on manufacturing activity in the Philadelphia area.
Friday, June 22
Canada is to round up the week with official data on consumer price inflation, which accounts for the majority of overall inflation.
Forexpros
