On Friday the Canadian Dollar posted modest gains against its peers and edged away from a four-and-a-half year low against its US counterpart as investors adjusted their positions before the month came to an end.
However, despite Friday’s rebound the ‘Loonie’ posted its biggest monthly decline against its US counterpart for more than two years in January.
The currency also ended the week softer against several of its rivals following the release of growth data for Canada which, although in line with expectations, showed a slower pace of expansion.
Ongoing risk aversion and disappointing manufacturing/non-manufacturing reports for China piled pressure on the commodity-driven Canadian Dollar over the weekend.
On Monday however the ‘Loonie’ recovered ground against its British counterpart, taking advantage of a disappointing UK manufacturing report to advance on a softening Pound.
Sterling slipped against the majority of its rivals during the local session after a gauge of manufacturing showed that the pace of expansion slowed in January.
Meanwhile, the Canadian Dollar was supported by the news that domestic producer prices climbed by more than expected at the close of 2013, advancing by 0.7 per cent in December, month-on-month as a result of higher energy prices and a weaker local currency.
Economists expected a gain of 0.3 per cent.
November’s reading was also positively revised from 0.1 per cent to 0.2 per cent.
According to Statistics Canada (who compiled the figures) if the Canadian Dollar hadn’t declined by 1.4 per cent against the US Dollar in December producer prices would have advanced by just 0.4 per cent.
Meanwhile, a separate report showed that Canada’s raw materials price index increased by 1.9 per cent in December, month-on-month, following a negatively revised drop of 4.2 per cent in November. The result fell slightly short of the gain of 2.0 per cent expected.
If tomorrow’s UK construction PMI surprises to the upside the GBP/CAD pairing could recover losses, although the Pound is likely to remain under pressure ahead of the Bank of England’s rate decision on Thursday.
Canadian reports to look out for include Wednesday’s building permits figures, Thursday’s Ivey Purchasing Managers Index and Friday’s unemployment figures.
Last month the Canadian economy shed unexpectedly shed 45,000 positions. If the data is revised or if an employment gain in January outweighs the decline the ‘Loonie’ may end the week on a high.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5531,
Canadian Dollar,,US Dollar,0.9031 ,
Canadian Dollar,,Euro,0.6703,
Canadian Dollar,,Australian Dollar,1.0275,
Canadian Dollar,,New Zealand Dollar,1.0949 ,
US Dollar,,Canadian Dollar ,1.1058 ,
Pound Sterling,,Canadian Dollar,1.8081,
Euro,,Canadian Dollar,1.4924,
Australian Dollar,,Canadian Dollar,0.9734,
New Zealand Dollar,,Canadian Dollar,0.8993 ,
[/table]
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