Canada dollar perks up on positive U.S. data
By Claire Sibonney
TORONTO (Reuters) - The Canadian dollar rose to a session high against the U.S. currency on Thursday after encouraging U.S. economic data pointed to a recovery in the housing and employment markets of Canada's largest export market.
In the United States, jobless claims dropped to a five-year low, while housing starts accelerated to their fastest pace in four years.
The reports trumped the impact of domestic data that showed foreign investment in Canadian securities more than halved to a six-month low in November, which helped to temper the gains in the currency.
"The Canadian data if anything should have made the currency weaker to some extent ... but it was definitely overshadowed by the firmer U.S. data," said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets. "At least for now that sort of risk-on appetite has been a good thing for the Canadian dollar."
Following the slew of data, the Canadian currency firmed to C$0.9847 versus the greenback, or $1.0155, from around C$0.9865, or $1.0137, immediately before the releases. However, it still remained fairly rangebound, trading in a narrow 40-point band with C$0.9887, or $1.0114, on the downside.
At 9:26 a.m. (1426 GMT), the Canadian dollar stood at C$0.9852 against the U.S. dollar, or $1.0150, firmer than Wednesday's North American session close at C$0.9861, or $1.0141.
RBC saw Canadian-dollar resistance around C$0.9826 and support near C$0.9926.
Looking forward into later this year, Chandler expects markets to see fewer knee-jerk reactions to U.S. data from the Canadian dollar. Continued...