Forexpros – The U.S. dollar ended the week sharply higher against its Canadian counterpart on Friday, as uncertainty over the euro zone bailout package and the outcome of Greece’s political turmoil boosted demand for the safe haven greenback.
USD/CAD hit 1.0227 on Friday, the pair’s highest since October 20; the pair subsequently consolidated at 1.0182 by close of trade on Friday, jumping 2.57% over the week.
The pair is likely to find support at 0.9972, the low of November 1 and resistance at 1.0327, the high of October 12.
The greenback rallied to two-week high against the loonie on Friday as risk sentiment was hit after German Chancellor Angela Merkel said that few countries in the Group of 20 nations had committed to providing more resources for the euro zone’s rescue fund.
Investors were also wary ahead of a confidence vote in Greece, on Friday evening. Despite strong internal opposition, Papandreou’s government passed the vote by a very narrow margin.
The dollar also found support after data showed that the U.S. unemployment rate ticked down unexpectedly in October to 9.0% and that non-farm employment rose less-than-expected by 80K in October.
Meanwhile, official data showed that the Canadian unemployment rate rose more-than-expected to 7.3% in October, after a reading at 7.1% the previous month.
Analysts had expected the unemployment rate to rise to 7.2% in October.
The data was followed by a report showing that Canadian building permits fell unexpectedly in September, tumbling 4.9% and confounding expectations for a 2.7% rise.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.42 a barrel by close of trade on Friday, adding 0.95% over the week, the fifth consecutive weekly gain.
Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead, developments in Greece will remain in focus, as opposition parties are calling for early elections while George Papandreou is pushing for a cross-party government to implement the latest European aid package.
Investors will also be closely watching for the U.S. weekly report on unemployment claims as well as Canadian data on housing starts and trade balance.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 7
The U.S. is to produce an official report on consumer credit, a leading indicator of consumer spending and confidence.
Tuesday, November 8
Bank of Canada Governor Mark Carney is due to speak. Later in the day, the country is to produce a report on housing starts, a leading indicator of economic health.
Wednesday, November 9
Canada is to produce official data on new housing price inflation, a key gauge of the housing industry’s health.
In the U.S., Federal Reserve Chairman Ben Bernanke is due to deliver welcoming remarks at the Federal Reserve Conference on Small Business and Entrepreneurship during an Economic Recovery. An official report on U.S. crude oil inventories is also to be released later Wednesday. This data can be a big market mover for the loonie due to the size of Canada’s energy sector.
Thursday, November 10
Canada is to produce official data on trade balance.
Meanwhile, the U.S. is also to release a report on trade balance as well as weekly data on unemployment claims. Later in the day, government reports are to be released on import prices and federal budget balance.
Friday, November 11
In Canada, markets will be closed due to a national holiday.
The U.S. is to round up the week with the University of Michigan’s preliminary report on consumer sentiment.
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