Canada dollar firms moderately, sentiment stays cautious

Thu Nov 15, 2012 10:07am EST
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar edged modestly higher against the U.S. dollar on Thursday, but North American economic data failed to push the currency out of a recent tight trading range.

"It's the range we've become unfortunately accustomed to. It's hard to read into a couple of pips one way or another," said David Tulk, chief Canada macro strategist at TD Securities.

Canadian manufacturing sales rose 0.4 percent in September from August, mainly on a sharp rise in aerospace, but sales fell in the heavyweight auto industry and in most other industries, according to Statistics Canada.

In the United States, new claims for U.S. jobless benefits surged to a 1-1/2 year high last week following devastating superstorm Sandy.

"Jobless claims is going to be skewed by the hurricane, so we can't read too much into that," Tulk said. "(There's) nothing too much on the data front to really alter sentiment from a very weak starting point overnight."

Tulk said the Canadian data met market expectations, but that he still considered it a bit weaker given the strength was mostly attributed to the volatile aerospace sector.

The Canadian dollar was trading at C$1.0011 versus the U.S. dollar, or 99.89 U.S. cents. This was firmer than Wednesday's North American finish of C$1.0038, or 99.62 U.S. cents.

The Canadian dollar could retest the C$1.0040 level, according to TD's daily FX outlook, with support remaining around the C$0.9985 to C$0.9995 area. The currency has been trading within this range for the past week.   Continued...