Investing.com - The broadly stronger U.S. dollar rose to five-and-a-half month highs against the Canadian dollar on Friday amid growing expectations for an early hike in U.S. interest rates.
USD/CAD was up 0.51% to 1.1091 in late trade on Friday, the highest level since March 27. For the week the pair advanced 1.89%.
The pair is likely to find support at around 1.1025 and resistance at around the 1.1130 level.
Expectations that the Federal Reserve is growing closer to raising interest rates continued to bolster investor demand for the greenback.
A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising sooner than markets expect.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Minutes from the Fed's July meeting indicated that the central bank was shifting its monetary policy stance towards raising rates from record lows.
Data on Friday showing that U.S. retail sales rose in August and another report showing that consumer sentiment rose to a 14-month high in September underlined the view that the economic recovery is deepening.
The greenback received an additional boost from increased safe haven demand after the U.S. and the European Union imposed a fresh round of economic sanctions on Russia over its actions in Ukraine.
Sentiment on the commodity linked Canadian dollar was also hit on Wednesday after official data showed that the annual rate of Chinese inflation rose less than expected in August, weighing on the demand outlook for crude oil.
Crude oil is Canada’s largest export and the country’s currency is sensitive to oil price fluctuations.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Fed policy meeting. Fed Chair Janet Yellen was to hold a press conference following the meeting.
Market participants will also be closely watching Canada’s monthly inflation report on Friday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 15
The U.S. is to release reports on manufacturing activity in the Empire State and industrial production.
Tuesday, September 16
Canada is to release data on manufacturing sales.
The U.S. is to produce data on producer price inflation.
Wednesday, September 17
The U.S. is to produce data on consumer price inflation, which accounts for the majority of overall inflation.
Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. Fed Chair Janet Yellen is to hold a press conference following the announcement.
Thursday, September 18
The U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.
Friday, September 19
Canada is to round up the week with data on consumer prices and wholesale sales.