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Forex - USD/CAD erases gains, retreats from 6-month high

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Forexpros - The Canadian dollar retreated from a six-month low against its U.S. counterpart on Tuesday, erasing sharp losses after better-than-expected domestic housing data eased concerns over the Canadian economic recovery.

USD/CAD clawed back from 1.0009 during U.S. morning trade, the pair's highest since February 1, to hit 0.9918 during U.S. morning trade, shedding 0.27%.

The pair was likely to find support at 0.9781, Monday's low and resistance at 1.0057, the high of January 31.

In a report, the Canada Mortgage and Housing Corporation said that the seasonally adjusted annual rate of housing starts rose to 205,000 units in July, above expectations for a gain of 195,000 units.

The previous month's figure was revised up to 201,000 units from a previously reported 197,000.

The loonie was also supported after crude oil for delivery in September rebounded from an 11-month low of USD75.72 a barrel to trade at USD82.14 a barrel on the New York Mercantile Exchange, jumping 1.55%.

Raw materials, including oil account for about half of Canada's export revenue.

Meanwhile, investors awaited a Federal Reserve statement on monetary policy due later in the day, which could provide hints regarding further easing.

With financial markets in turmoil, expectations grew that the central bank would introduce further easing to calm investors and stimulate growth in the world's largest economy after it completed a USD600 billion Treasury bond-buying program known as Quantitative Easing 2 on June 30.

Elsewhere, the Canadian dollar was down against the euro, with EUR/CAD gaining 0.33% to hit 1.4147.

The loonie was weaker across the board earlier after worries over the global economic outlook were exacerbated following a report from China's National Bureau of Statistics showing that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest pace in three years.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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