Forex - USD/CAD dips on U.S. manufacturing data
Published Apr 02, 2012 10:52PM ET
In Asian trading on Tuesday, USD/CAD hit 0.9896, down 0.09%, up from a low of 0.9894 and off a high of 0.9909.
The pair sought to test support at 0.9889, Monday's low, and resistance at 0.9999, Friday's high.
In the U.S., manufacturing activity grew at a faster pace than forecast last month, with the Institute for Supply Management reporting that its manufacturing index rose to 53.4 in March from 52.4 in February, outpacing expectations for a reading of 53.0.
Readings above 50 indicate a sector in expansion.
The numbers sent investors shorting dollars to free up capital to invest in equities and other riskier assets that tend to perform well amid firming economies, sending stocks and commodities rising and the dollar softening.
The news was especially bullish for Canada, a neighbor and heavy trading partner with the U.S.
Hopes that increased manufacturing and economic activity in the U.S. will mean increased demand for Canadian goods and services boosted spirits.
Furthermore, sentiment that a more robust U.S. economy will push up both demand and prices for oil and other raw materials further supported the currency in commodity-rich Canada.
The Canadian dollar, meanwhile, was down against the euro and down against the yen, with EUR/CAD up 0.08% and trading at 1.3205 and CAD/JPY down 0.12% at 82.76.
Later Tuesday, the Federal Reserve will release the minutes of its most recent Federal Open Market Committee meeting, shedding insight into the U.S. central bank's attitudes towards currently loose policies.
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Written By: Investing.com
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