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Forex - USD/CAD slides lower after U.S. housing data disappoints

Published 12/16/2014, 09:26 AM
Updated 12/16/2014, 09:26 AM
Greenback pulls away from 5-year highs vs. loonie on U.S. data

Greenback pulls away from 5-year highs vs. loonie on U.S. data

Investing.com - The U.S. dollar slid lower against its Canadian counterpart on Tuesday, pulling away from the previous session's five-year high after the release of disappointing U.S. housing data, althoug a weak manufacturing sales report from Canada limited the greenback's losses.

USD/CAD hit 1.1612 during early U.S. trade, the session low; the pair subsequently consolidated at 1.1622, declining 0.42%.

The pair was likely to find support at 1.1545, Monday's low and resistance at 1.1674, Monday's high and a five-year peak.

In a report, the Census Bureau said that U.S. building permits fell by 5.2% last month to 1.035 million units from 1.080 million in October. Analysts had expected building permits to slip 3.4% to 1.060 million units in November.

The report also showed that U.S. housing starts declined 1.6% last month to 1.028 million units from an upwardly revised 1.045 million units in October. Analysts had expected housing starts to reach 1.030 million in November.

Meanwhile, Statistics Canada reported that local manufacturing sales decreased by 0.6% in October, more than the expected 0.3% slip. Manufacturing sales rose 2.2% in September, whose figure was revised from a previously estimated 2.1% gain.

A separate report showed that Canada's foreign security purchases rose to C$9.53 billion in October from C$4.64 billion in September, whose figure was revised from a previously estimated C$4.37 billion.

Analysts had expected foreign security purchases to rise to C$5.21 billion in October.

Meanwhile, markets remained jittery ahead of Wednesday's Federal Reserve policy statement, as ongoing speculation over the prospects for a U.S. rate hike next year fuelled expectations that the U.S. central bank could adjust its forward guidance.

The loonie was lower against the euro, with EUR/CAD rising 0.31% to 1.4560.

The euro found support after the ZEW Centre for Economic Research said that its index of German economic sentiment jumped to a seven-month high of 34.9 in December from 11.5 in November.

Earlier Tuesday, survey data showed that euro zone private sector activity grew at a slightly faster rate in December, but the rate of expansion was still one of the weakest seen over the past year.

The euro area composite output purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, rose to a two-month high of 51.9, off November’s 16-month low of 51.1.

Germany’s private sector expanded at the slowest rate in 18 months, while French private sector activity remained in contraction territory.

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