Forex Market: USD/CAD pares daily losses following upbeat US durable goods report

The loonie, as the Canadian dollar is best known, pared daily advances against its US counterpart after data showed durable goods orders rose more-than-expected last month, fueling optimism over the US economic outlook.

USD/CAD touched a session low at 1.1124 at 09:30 GMT, after which the pair trimmed daily losses to trade at 1.1154 at 15:48 GMT, losing 0.09% for the day. Support was likely to be received at March 19th low, 1.1122, while resistance was to be encountered at March 25th high, 1.1211.

Demand for the US dollar was heightened after it became clear that US durable goods orders rose more-than-expected in February.

Durable goods orders rose 2.2% in February, sharply exceeding analysts’ expectations of a 0.8% increase and following a 1.3% drop in the previous month, data by the US Commerce Department showed today. The increase was mainly driven by orders for motor vehicles and parts, which jumped 3.6 percent last month, the biggest gain since February last year, data from the report revealed.

Shipments of the core durable goods, which exclude the volatile transportation items, rose 0.2% in February, slightly below analysts’ forecasts for a 0.3% gain and after a 0.9% advance in the previous month.

“We are still encouraged by the outlook on the factory sector once we get past this period,” said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina, interviewed by Thomson Reuters.

Meanwhile, Statistics Canada reported last week that nation’s consumer price inflation advanced at the fastest pace in a year, rising 0.8% in February, exceeding analysts’ projections of a 0.6% increase and after consumer prices edged 0.3% higher in the previous month.

In addition, core consumer price inflation, which excludes the eight most volatile items, increased 0.7% last month, the most in a year, outstripping analysts’ expectations of a 0.5% gain and after a 0.2% advance in the preceding month.

“From a broad perspective, its a little bit of an uptick in the loonie. Its really driven by a small gain in risk appetite,” said Rahim Madhavji, president at KnightsbridgeFX.com in Toronto, cited by Thomson Reuters.

Elsewhere, USD/RUB touched a session low at 35.333 at 06:15 GMT, after which the pair trimmed losses to trade at 35.438 at 14:45 GMT, losing 0.19% for the day. Support was likely to be received at February 18th low, 35.169, while resistance was to be met at March 25th high, 36.140.