TORONTO: The Canadian dollar weakened against the greenback on Tuesday as encouraging economic data south of the border prompted investors to pick up the US currency, to the detriment of the loonie.
The Canadian dollar saw little benefit from renewed risk appetite in other financial markets as concerns over geopolitical tensions between Ukraine and Russia eased.
Despite some intraday swings, the loonie has mostly moved sideways since the end of July. While analysts expect the currency could consolidate around the C$1.09 level for now, it is likely to weaken further before long, partly due to an improving US economy.
Data on Tuesday supported that view as housing starts and building permits surged in July, while consumer prices rose only modestly.
"The data that came out stateside - the housing data particularly - was better than expected, and that's been one of the weaker segments of the US economy lately," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.
The Canadian dollar was at C$1.0908 to the greenback, or 91.68 US cents, weaker than Monday's close of C$1.0886, or 91.86 US cents.
The next economic catalyst for the Canadian dollar does not come until Friday, when reports on inflation and retail sales will be released. Investors will also be watching for any monetary policy news that comes out of the annual gathering of central bankers and economists in Jackson Hole, Wyoming, at the end of the week.
The range for the US dollar-Canadian dollar has been well anchored, said Mikolich, with the downside where the 100- and 200-day moving averages merge around C$1.0865 and C$1.0870, and resistance around C$1.0910 and C$1.0935.
"The backdrop certainly supports US dollar higher, Canada lower over that medium term," Mikolich said. "The Canadian data is at least delaying any meaningful move higher (for the pair) for the time being."
Canadian government bond prices were higher across the maturity curve, with the two-year up 1-1/2 Canadian cents to yield 1.065 percent and the benchmark 10-year up 20 Canadian cents to yield 2.043 percent.
Comments
Comments are closed for this article.