Forex - USD/CAD dips on Yellen, data, Canadian factory report weighs

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Investing.com - The U.S. dollar weakened against its Canadian counterpart on Friday after soft U.S. factory data and dovish comments from Federal Reserve Chair Nominee Janet Yellen fanned expectations for monetary stimulus tools to stay in place into 2014.

Soft Canadian factory sales figures cushioned the greenback's losses and kept the pair range bound.

In U.S. trading on Friday, USD/CAD hit 1.0452, down 0.14%, up from a low of 1.0450 and off a high of 1.0485.

The pair sought to test support at 1.0441, Thursday's low, and resistance at 1.0526, Thursday's high.

The Federal Reserve reported earlier that U.S. industrial production edged down 0.1% in October after expanding 0.7% in September.

Analysts were expecting a 0.2% expansion, and the surprise contraction weakened the dollar by fanning sentiments the Fed won't scale back its USD85 billion in monthly bond purchases until early 2014.

Bond purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process.

On Thursday, Fed Chair Nominee Janet Yellen told the Senate Banking Committee that while the economy is on the mend, inflation and unemployment rates have room to move closer to Fed comfort zones, which markets interpreted as a sign the U.S. central bank wants to see consistent improvements to economic indicators before winding down stimulus tools.

Her comments put to rest lingering expectations that the Fed may announce plans to scale back stimulus tools at its December meeting.

Also in the U.S., the Federal Reserve of Bank of New York said its manufacturing activity index declined to -2.21 in November from 1.52 in October, defying expectations for a rise to 5.00, which added to the dollar's decline.

A separate report showed that U.S. import prices fell 0.7% in October compared to expectations for a 0.4% decline after a downwardly revised 0.1% rise the previous month.

Elsewhere, Statistics Canada reported that manufacturing sales rose 0.6% in September, missing market calls for a 1% increase after a 0.2% decline the previous month, which capped the loonie's advance against the greenback.

The Canadian dollar, meanwhile, was down against the euro and up against the yen, with EUR/CAD up 0.05% and trading at 1.4093 and CAD/JPY up 0.39% at 95.93.









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This article appears in: Investing , Forex and Currencies

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