U.S. dollar dips against Canadian dollar
The U.S. dollar edged lower against the Canadian dollar on Monday as investors shrugged off lackluster data from China, while prospects for a U.S. interest rate hike as soon as early next year continued to underpin the greenback.
USD/CAD touched lows of 1.1209 and was last down 0.07% to 1.1213, not far from last Thursday’s four-and-a-half year highs of 1.1277.
The pair was likely to find support at 1.1173, Friday’s low and resistance at 1.1277.
The greenback continued to remain supported after markets brought forward expectations for a U.S. rate increase after Fed Chair Janet Yellen suggested last week that borrowing costs might start to rise about six months after the bank’s stimulus program ends, which is expected to happen in the fall.
Investors shrugged off a report showing that Chinese manufacturing activity deteriorated again in March.
The preliminary reading of China’s HSBC manufacturing purchasing managers’ index fell to an eight-month low of 48.1 in March from a final reading of 48.5 in February. Analysts had expected the index to tick up to 48.7.
The loonie, as the Canadian dollar is also known, received lingering support after stronger-than-forecast data on inflation and retail sales on Friday eased pressure on the Bank of Canada to cut rates.
Statistics Canada reported that consumer prices rose 0.8% in February, up from 0.3% in January. Analysts had forecast a 0.6% rise.
On a year-over-year basis, inflation slowed to 1.1%, from 1.5% in January.
Earlier in the week, BoC Governor Stephen Poloz had warned that the bank could have to cut rates if inflation remains low.
Elsewhere, the euro was lower against the loonie, with EUR/CAD down 0.23% to 1.5446.
The euro slipped after data released on Monday showed that German private sector activity slowed in March. The data overshadowed another report showing a return to growth in the bloc’s second largest economy, France.