Canadian dollar advanced further against its US counterpart on Friday, continuing this movement from yesterday, after Canadian wholesale sales recorded unexpected jump in May, as shown on Thursday.
USD/CAD slid to a session low at 1.0359 at 3:31 GMT, after which consolidation followed at 1.0375, still slightly on negative territory, losing 0.05% for the day. Support was expected at July 17th low, 1.0354, while resistance was likely to be encountered at July 16th high, 1.0441.
On Thursday it became clear that Canadian wholesale sales climbed significantly more than projected in May, recording the largest rate of increase in over two years, supported by better sales results of first necessities and fertilizers. Wholesale sales rose by 2.3% to reach 50.34 billion CAD in the month of May, considerably outstripping experts initial estimates of a mere 0.3% increase rate.
“Wholesale sales suggest there could be a bit of an upside to the rather soft expectations people had for growth in the second quarter,” Greg T. Moore, a currency strategist at Toronto-Dominion Bank, said in a telephone interview, cited by Bloomberg.
Additionally, Bank of Canada raised its economic growth forecast for 2013 yesterday to 1.8%, as the April prediction pointed 1.5% growth. The central bank revised down its 2014 growth projection to 2.7% from 2.8% previously.
Canadian currency lost ground earlier this week after Bank of Canada Governor Stephen Poloz said that economy had significant slack and inflation remained muted, reserving a place in the background for the potential interest rate increase.
Meanwhile, Federal Reserve Bank Chairman Bernanke said that economic recovery in the United States was continuing at a moderate pace, but also reiterated that banks monetary policy will remain accommodative in the foreseeable future. The Chairman stressed that the Federal Reserve could begin to scale back its Quantitative Easing by the end of this year, if economy continued the process of gradual recovery. On Thursday two indicators pointed that way, as initial jobless claims decreased in number more than expected during the last week and Philadelphia FED Index, gauging manufacturing activity, accelerated significantly during July.
Elsewhere, the loonie, as Canadian dollar is also known, was trading lower against the euro, as EUR/CAD pair added 0.14% for the day, reaching 1.3628.
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