USD/CAD advanced on Canadian and US data

During Friday trade the greenback gained ground against the Canadian dollar, following the release of weak Canadian economic indicators, which triggered selling pressure on the loonie, while at the same time US dollars gains seemed limited due to mixed US data.

USD/CAD reached its highest point today at 1.0342 at 13:09 GMT, after which consolidation followed at 1.0335, still on positive ground for the day by 0.28%. Support was likely to be found at August 12th low, 1.0281, while resistance was to be encountered at August 6th high, 1.0391.

Earlier on Friday a report showed that Canadian manufacturing shipments decreased unexpectedly in the month of June for the fourth time in the past six months, due to lower sales of jewelry, silver, metallic and wooden products. Shipments fell by 0.5% to 48.22 billion CAD, after the registered 0.6% climb in May, as the latter was a revision down from 0.7% previously.

Another report said that Canadian international securities transactions dropped significantly in June, by 15.40 billion CAD, the largest decrease since October 2007, following the increase by 6.80 billion CAD in May, a result which was a revision up from 6.74 billion CAD previously. Initial estimates pointed that transactions will increase by 5.00 billion CAD.

Meanwhile, in the United States, an official report said that housing starts in the country rose in July, although the drop in construction of single-family houses implied possible more serious problems in the future for the housing sector. Housing starts rose by 5.9% in July to 0.896 million houses on a monthly basis, as in June the indicator showed a 0.846 million houses. Construction of multi-family houses, including apartments, rose by 26% in July, but on the other hand, construction of single-family houses decreased by 2.2%. In annual terms, overall activity in the housing sector advanced 20.9%. Experts had projected that the monthly performance of the sector will improve by 8.9%. The report suggested a mixed picture, regarding the housing sector in the United States, as its activity increased during two out of the three past months, which could prove favorable to economic recovery. However, Julys result was mainly due to multi-family housing projects, which are considered volatile.

Additionally, US building permits rose by 2.7% to 0.943 million units in July, slightly below the projected number of 0.945 million units. In June the number of permits was revised up to 0.918 million units from 0.911 million units previously.

These reports fueled the notion that US economic recovery was not sufficiently strong for the Federal Reserve Bank to begin tapering its easing program.

Elsewhere, the Canadian currency was trading lower against the euro, with EUR/CAD pair advancing 0.47% to 1.3825 at 14:22 GMT. GBP/CAD cross was also gaining, up by 0.41% to trade at 1.6188 at 14:22 GMT.