Investing.com - The U.S. dollar ended the day higher against the Canadian dollar on Friday as expectations that the Federal Reserve will soon start to pull back on asset purchases lent broad support to the greenback.
USD/CAD hit session highs of 1.0552, the pair's highest since June 24, before trimming gains to close at 1.0515, 0.41% for the day and 0.34% higher for the week.
The pair is likely to find support at 1.0452, Friday's low and resistance at 1.0555, the high of June 24 and a 20-month high.
Data on Friday showed that the University of Michigan's consumer sentiment index rose to 84.1 from a preliminary reading of 82.7 in June, nearing the almost six-year high reached in May.
The dollar was also boosted after Fed Governor Jeremy Stein indicated that the bank may begin tapering its USD85 billion-a-month asset purchase program in September.
Stein said the decision to taper bond buying must be based on economic progress since the Fed implemented its easing program and should not be "excessively sensitive" to economic data releases in the weeks preceding the decision.
Investors had scaled back expectations that the Fed will start tapering bond purchases this year following a downward revision to U.S. first quarter growth on Wednesday.
The Commerce Department revised down first quarter growth to an annualized 1.8% from an initial estimate for 2.4% growth.
In Canada, official data on Friday showed that the economy grew slightly more than expected in April.
Statistics Canada said gross domestic product expanded by 0.1%, following growth of 0.2% in March. Economist had expected a flat reading in May.
The report said Canadian services sector output expanded 0.3% on the month but output in the goods sector declined 0.3%, as oil and gas extraction dropped 2.7%.
Looking ahead, Friday's U.S. nonfarm payrolls data will be closely watched for indications of how the recovery in the U.S. labor market is progressing. Meanwhile, Canada is to release trade and employment data.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 1
Markets in Canada are to remain closed for a national holiday.
In the U.S., the Institute of Supply Management is to produce a report on manufacturing activity, a leading economic indicator.
Tuesday, July 2
The U.S. is to release official data on factory orders, a leading indicator of production.
Wednesday, July 3
Canada is to produce government data on the trade balance, the difference in value between imports and exports.
The U.S. is to release the ADP report on nonfarm payrolls, which leads the closely watched government report by two days. The U.S. is also to release the weekly government report on initial jobless claims, one day ahead of schedule, as well as data on the trade balance.
In addition, the ISM is to produce a report on U.S. service sector activity.
Thursday, July 4
Markets in the U.S. are to remain closed for the Independence Day holiday.
Friday, July 5
Canada is to release government data on the change in the number of people employed and the unemployment rate, a leading economic indicator, as well as the Ivey PMI.
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average hourly earnings.
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