Forex - USD/CAD pares gains as weak data pressures greenback

Investing.com – The U.S. dollar pared gains against its Canadian counterpart on Tuesday, pulling back from the daily high after weak U.S. data on building permits and housing starts added to concerns over the U.S. economic recovery.

USD/CAD pulled back from 0.9871, the daily high, to hit 0.9841 during early U.S. trade, still up 0.42% on the day.  

The pair was likely to find support at 0.9765, the low of August 10 and resistance at 0.9918, the high of August 12.

The U.S. Census Bureau said earlier that the number of building permits issued in the U.S. fell 3.2% to a seasonally adjusted 0.60 million in July, down from 0.62 million in June.

Analysts had expected building permits to decline 1.9% to 0.61 million units in July.

U.S. housing starts fell 1.5% in July to hit a seasonally adjusted 0.60 million, broadly in line with expectations. The previous month’s figure was revised down to 0.62 million from 0.63 million.

Meanwhile, Statistics Canada said in a report earlier Tuesday that manufacturing sales declined by a seasonally adjusted 1.5% in June, worse than the expected 0.5% decline.

Manufacturing sales in June totaled CAD45.3 billion, the lowest level since November 2010. Sales have declined for three consecutive months after growing steadily since May 2009.

The loonie was also weighed after crude oil for delivery in October fell 1.4% to trade at USD86.47 a barrel on the New York Mercantile Exchange.

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

The loonie came under pressure earlier as risk aversion sharpened after weaker-than-expected growth data out of Germany added to fears over global growth prospects.

Elsewhere, the Canadian dollar was also down against the euro, with EUR/CAD edging 0.13% higher to hit 1.4165.

Later in the day, German Chancellor Angela Merkel and French President Nicolas Sarkozy were to meet in Paris to address the region’s sovereign debt crisis.