Forex Pros –Last week saw the Canadian dollar post the largest weekly decline against its U.S. counterpart in almost two months, as concerns that Greece’s sovereign debt crisis could worsen dampened demand for higher yielding assets.
USD/CAD hit 0.9699 on Wednesday, the weeks low; the pair subsequently consolidated at 0.9884 by close of trade on Friday, surging 0.70% over the week.
The pair is likely to find support at 0.9699, the low of June 22 and resistance at 0.9973, the high of March 15.
Greece’s parliament must approve a EUR28.4 billion austerity package next week in order to receive a second tranche of bailout loans from the European Union and International Monetary Fund and avert a sovereign debt default.
On Friday, Socialist deputy Thomas Robopoulos said he wasn’t prepared to vote for the government’s planned austerity package.
The greenback was also boosted after Federal Reserve Chairman Ben Bernanke confirmed Wednesday that the bank was winding up its monetary easing program at the end of this month and said further easing was unlikely.
But Bernanke said there was “uncertainty” about how much of the recent U.S. slowdown was permanent or transitory.
The Fed cut its cut its 2011 economic growth forecast for the U.S. to a range of 2.7% to 2.9%, down from a previous estimate of 3.1% to 3.3%. Policymakers also cut their outlook for growth in 2012 and raised estimates for unemployment.
On Thursday, U.S. data showed that the number of people in the filing for initial jobless benefits rose to a seasonally adjusted 429,000 in the week ending June 18, from 414,000 the previous week, confounding expectations for a decline to 410,000.
Meanwhile, crude oil for delivery in August tumbled to a four month low on the New York Mercantile Exchange on Friday, to close at USD91.28, falling more than 2% over the week.
Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead, the focus looks likely to remain on Greece, with the Greek parliament due to hold its critical vote on austerity measures on Wednesday and Thursday. Meanwhile, a relatively small amount of U.S. data is scheduled for release, with the main highlight looking likely to be Friday’s ISM manufacturing index.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 27
The U.S. is to publish government data on personal income and expenditure as well as a consumer price index.
Tuesday, June 28
The U.S. is to publish industry data on house price inflation, a leading indicator of the housing industry’s health as well as a report on consumer confidence, a leading indicator of consumer spending.
Wednesday, June 29
The U.S. is to publish industry data on pending home sales as well as official data on crude oil stockpiles. This data can be a big market mover for the Canadian dollar due to the volume of Canada’s oil exports.
Meanwhile, Canada is to publish government data on consumer price inflation, which accounts for a majority of overall inflation.
Thursday, June 30
The U.S. is to publish its weekly government report on initial jobless claims, as well as data on manufacturing activity in the Chicago region.
Canada is to publish its monthly report on gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
Friday, July 1
Markets in Canada are to remain closed for a bank holiday, while the U.S. is to round up the week with a report by the Institute of Supply Management on manufacturing activity and revised data on consumer sentiment and inflation expectations from the University of Michigan.
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