CANADIAN DOLLAR STEADIES AFTER PREVIOUS SHARP DROP The Canadian dollar firmed modestly against the greenback on Monday, steadying after the previous sessions sharp drop, as investors positioned themselves ahead of some key economic reports on both sides of the border this week. Still, the currency did not recover very much of last weeks losses, which could lead to more downside after it fell through some significant technical levels on Friday, analysts said. Were in a bit of a holding pattern ahead of the critical economic releases this week. The Canadian dollar-U.S. dollar pairing faces key technical resistance at the C$1.0830 area and a break through that could take it toward C$1.0950. The fact that U.S. dollar-Canadian dollar held onto its gains and hasnt retreated is a good indication that traders are willing to hold on to their U.S. dollar long positions and not just drop the market, and get in and out and make a quick buck. The Canadian dollar ended the North American session at C$1.0800 to the greenback, or 92.59 U.S. cents, stronger than Fridays close of C$1.0814 or 92.47 U.S. cents. After last weeks relatively quiet domestic calendar, investors will get a look at more economic data in the coming days, including Canadian economic growth for May and producer prices for June. But the bigger focal point this week will be the United States, where markets will get the first reading of second-quarter growth figures and the July unemployment report, as well as a Federal Reserve meeting. The U.S. gross domestic product report could have the biggest impact on markets, with risk to the downside if the economy doesnt achieve the 3 percent growth rate economists forecast. While that could hurt the U.S. dollar, it could be a benefit to the loonie. If we do see something come in lower than expected, I dont think markets are necessarily prepared for that. Canadian government bond prices were mixed, with the two-year off 1 Canadian cent to yield 1.088 percent. The U.S. dollar traded mostly flat against a basket of major currencies on Monday, halting last weeks advance but still hovering near six-month highs as traders awaited a glut of economic data and policy releases. The dollar inched lower against the euro but still traded near eight-month highs against the shared currency ahead of Wednesdays release of U.S. second-quarter gross domestic product growth and a Federal Reserve policy announcement. Traders also eyed Fridays report on U.S. nonfarm payrolls growth for July. Were probably going to see some quiet ahead of the major risk events, in reference to the slight moves in major currencies. Traders are watching the Fed closely for hints of a more hawkish monetary policy after a two-day policy meeting ends on Wednesday. Economists forecast U.S. GDP grew 3 percent in the second quarter after a sharp contraction of 2.9 percent in the first quarter, and expect U.S. employers to have added 233,000 jobs in July, according to Reuters polls. Stronger-than-expected U.S. data on services sector activity on Monday had little impact on major currencies. Financial data firm Markit said its preliminary services Purchasing Managers Index was 61.0 in July, unchanged from June and above expectations for a reading of 59.8. The National Association of Realtors said Monday that contracts to buy previously owned U.S. homes unexpectedly fell in June. NARs Pending Home Sales Index, based on contracts signed last month, fell 1.1 percent to 102.7 and confounded economists expectations for a 0.5 percent gain. The weakness could have also kept the dollar from rising given the importance of housing on the U.S. economy, said Eric Viloria, a currency strategist at Wells Fargo Securities in New York. The euro last traded 0.03 percent higher against the dollar at $1.3433, just above an eight-month low of $1.3421 touched on Friday. The dollar last traded flat against the Japanese yen at 101.865 yen, and was down 0.03 percent against the Swiss franc at 0.90425 franc.
Posted on: Tue, 29 Jul 2014 12:48:28 +0000
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