USD/CAD edges lower after US data, eyes on Fed meeting

US dollar edged lower against its Canadian counterpart on Monday, putting to a halt a three-day advance, after the release of disappointing pending home sales out of the United States, while market focus began shifting to Federal Reserves policy meeting later in the week.

USD/CAD slipped from a session high at 1.0452 recorded at 13:07 GMT, to trade at 1.0444 at 13:50 GMT, losing 0.08% for the day. Support was likely to be received at October 25th low, 1.0409, while resistance was to be encountered at October 25th high, 1.0459.

Canadian dollar put to a halt a three-day loss against the greenback on speculation that its has fallen too rapidly. “It’s halted the slide for now,” said Brad Schruder, director of foreign exchange at Bank of Montreal, cited by Bloomberg News. “The market is looking at what’s been happening in the U.S. and they’re not confident a strong-dollar policy, or a basis for a strong-dollar environment, is there as long as the Fed is going through all these challenges.”

Royal Bank of Canada said on October 23rd that it revised down its economic growth outlook for the current year to 1.6% from 1.8% previously. Bank’s policy statement this week stressed on the need for future raise in the benchmark interest rate, something which has been repeated at every prior policy meeting since April 2012. The central bank updated its projection to 2015, as previously it pointed the third quarter of 2014.

The Federal Reserve Bank starts a two-day policy meeting tomorrow, as expectations pointed that policymakers will probably maintain the current monthly pace of stimulus.

Meanwhile, a report showed that industrial output in the United States rose 0.6% in September on a monthly basis, exceeding preliminary estimates of a 0.4% gain, after production climbed 0.4% in August. Capacity utilization rate increased 0.4% to reach 78.3% in September, again beating expectations of a rate of 78.0%. September’s industrial output figure almost matched levels recorded in 2007, something unseen since the beginning of recession.

However, it became clear that the index of pending home sales in the US declined 5.6% in September to reach a value of 101.6, or the lowest level since December 2012. In August compared to July sales decreased 1.6%. During September 2013 compared to September 2012 the drop was 1.2%, or the first annual drop in two years. Analysts had projected that the index will show a 0.5% advance.

Elsewhere, the Canadian currency was higher against the euro, with EUR/CAD cross shedding 0.30% on a daily basis to trade at 1.4395 at 14:15 GMT. GBP/CAD pair was also on negative territory, down 0.27% to trade at 1.6874 at 14:17 GMT.