US Dollar is gaining on its Canadian counterpart despite the previous rally in oil, where CAD is related to, after upbeat US jobless claims data and a more disappointing building permits report from Canada.
The US Department of Labor said initial jobless claims in the week ending September 3 decreased by 4,000 to 259,000 from the previous week’s total of 263,000. Analysts expected jobless claims to rise by 2,000 to 265,000 last week.
On the other hand, Statistics Canada reported that building permits rose 0.8% in July, compared to expectations for a 0.3% gain. Building permits dropped 5.3% in June, which figure was revised from a previously estimated 5.5% decline. Also, the new housing price index improved from 0.1% to 0.4% month-on-month while the yearly score improved from 22.5% to 2.8%. Investors hesitated to buy into the Canadian Dollar as other risky currencies appeared more appealing.
A sharp slump in the Ivey PMI did not encourage confidence in the outlook of the Canadian economy, suggesting that activity is not as robust as policymakers would like. Add to that the previous bank of Canada meeting where central bank deputy Timothy Lane delivered a speech that displayed the two speeds present in the economy, also keeping interest rates unchanged.
At the time of writing, loonie is trading from 1.2908 to 1.2954, considerably higher than yesterday’s trade. Putting the chart in perspective, with the lows of June 8 at 1.2652 and the highs of July 27 at 1.3251, current trading has passed briefly over the 1.2951 resistance level. A breakthrough would present another resistance level at 1.3022, and a drop below the current support level at 1.2880 would lead to second support level at 1.2653.
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