Forexpros – The U.S. dollar ended the week sharply lower against its Canadian counterpart on Friday, as new plans to counter the effects of the debt crisis in the euro zone boosted demand for riskier assets.
USD/CAD hit 1.0132 on Wednesday, the pair’s lowest since September 22; the pair subsequently consolidated at 1.0099 by close of trade on Friday, plummeting 2.77% over the week.
The pair is likely to find support at 1.0051, the low of September 22 and resistance at 1.0393, the high of October 10.
The greenback tumbled to a three-week low against the loonie on Friday, as risk appetite was boosted after France and Germany moved closer to an agreement on a plan to recapitalize European lenders, bolster the firepower of the euro zone’s bailout fund and restructure Greek sovereign debt.
Market sentiment was also lifted after official data showed that U.S. retail sales rebounded in September, increasing at the fastest rate in seven months.
The Commerce Department said sales rose 1.1% last month, after a revised 0.3% increase in August, outstripping expectations for a 0.5% gain.
Earlier in the week, risk appetite was boosted after officials from the European Union, International Monetary Fund and European Central Bank said Greece was likely to receive its next bailout package next month.
The Canadian dollar was also boosted as crude oil rallied to a one-month high.
On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD87.28 a barrel by close of trade on Friday, after jumping 4.5% over the week.
The Canadian dollar closely tracks changes in crude oil prices, as Canada is the largest foreign supplier of crude oil to the U.S.
In the week ahead, signs of progress in resolving the euro zone’s debt crisis look likely to continue to support risk appetite, while the U.S. is to publish a string of economic data, with reports on manufacturing, housing and inflation to come.
Investors will also be eyeing the Bank of Canada’s quarterly report on the outlook for business.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, October 17
The U.S. is to publish government data on industrial production and the capacity utilization rate. The country is also to publish data on manufacturing activity in New York state, a leading indicator of economic health.
Also Monday, Canada is to produce government data on foreign securities purchases, while the Bank of Canada is to publish its quarterly report on the outlook for business.
Tuesday, October 18
The U.S. is to produce government data on producer price inflation, a leading indicator of consumer inflation, as well as data on the balance of domestic and foreign investment in the U.S.
Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak in Boston; his remarks will be closely watched for any clues to the future possible direction of monetary policy.
Wednesday, October 19
Canada is to publish an index of leading economic indicators, designed to predict the future direction of the economy.
The U.S. is to release a flurry of data, with a government report on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The U.S. is also to publish data on consumer price inflation, which accounts for the majority of overall inflation.
In addition, the Fed is to publish its Beige Book, which looks at current economic conditions. The country is also to publish data on crude oil stockpiles. This data can be a big market mover for the loonie due to the size of Canada’s energy sector.
Thursday, October 20
The U.S. is to publish its weekly report on initial jobless claims, as well as data on manufacturing activity in Philadelphia and an industry report on existing home sales.
In addition, Canada is to publish a government report on wholesale sales, a leading indicator of consumer spending.
Friday, October 21
Canada is to round up the week with government data on consumer price inflation, which accounts for the majority of overall inflation.
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