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Forex - USD/CAD rises to 1-month highs, BoC holds

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Investing.com -

Investing.com - The U.S. dollar rose to one-month highs against its Canadian counterpart on Wednesday, after the Bank of Canada left interest rates unchanged, while downbeat Canadian trade data weighed on demand for the loonie.

USD/CAD hit 1.0951 during U.S. morning trade, the pair's highest since May 6; the pair subsequently consolidated at 1.0947, gaining 0.36%.

The pair was likely to find support at 1.0891, Tuesday's low and resistance at 1.0989, the high of May 5.

In a widely expected move, the BoC held its benchmark interest rate at 1%, saying that "the balance of risks remains within the zone for which the current stance of monetary policy is appropriate."

Earlier Wednesday, official data showed that Canada's trade balance swung into a deficit of C$0.64 billion in April, from a surplus of C$0.77 billion in March whose figure was revised up from a previously estimated surplus of C$0.08 billion.

Analysts had expected the trade surplus to narrow to C$0.10 billion in April.

In the U.S., the Institute of Supply Management said its non-manufacturing index rose to a nine-month high of 56.3 in May, from a reading of 55.2 the previous month, compared to expectations for a rise to 55.5.

The data came after payroll processing firm ADP said non-farm private employment rose by 179,000 in May, below expectations for an increase of 210,000. April's figure was revised down to a gain of 215,000 from a previously reported increase of 220,000.

A separate report showed that U.S. trade deficit widened to $47.24 billion in April, from $44.18 billion in March whose figure was revised from a previously estimated deficit of $40.40 billion. Analysts had expected the trade deficit to widen to $40.80billion in April.

The loonie was lower against the euro, with EUR/CAD adding 0.25% to 1.4902.

Also Wednesday, Markit said Germany's services purchasing managers' index fell to 56.0 in May from 56.4 in April, confounding expectations for the index to remain unchanged.

Separately, Spain's services PMI fell to 55.7 in May, from a reading of 56.5 the previous month, while Italy's services PMI rose to 51.6 last month, from 51.1 in April.

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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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