Forex - USD/CAD Turns Lower as Weak Data Weighs on Greenback

Forexpros – The U.S. dollar erased gains against its Canadian counterpart on Monday, retreating from a daily high after downbeat data on manufacturing activity in the New York region and a report showing foreigners were net sellers of U.S. assets in June weighed on the greenback. 

USD/CAD pulled back from 0.9905, the daily high, to hit 0.9868 during early U.S. trade, edging 0.04% lower on the day. 

The pair was likely to find support at 0.9765, the low of August 10 and resistance at 0.9968, the high of August 11.

The New York Federal Reserve’s index of manufacturing conditions unexpectedly deteriorated in August, remaining in negative territory for the third consecutive month, official data showed earlier.

In a report, the Federal Reserve Bank of New York said that its general business conditions index fell by 3.9 points to minus 7.7 in August from minus 3.8 in July. 

Analysts had expected the index to improve to minus 0.4 in August.

A separate report showed that net foreign purchases of long-term U.S. securities totaled USD3.7 billion in June, significantly below expectations of USD30.1 billion.

According to the data, foreign investors sold USD18.3 billion in U.S. Treasuries in June, the most since June 2000. The declines were concentrated in Luxembourg and the Cayman Islands, suggesting private funds were doing the selling.

Also Monday, Statistics Canada said that new motor vehicle sales jumped by 10.8% in June, blowing past expectations of a 2.4% gain.

The loonie found further support after crude oil for delivery in October rose 1.15% to trade at USD86.67 a barrel on the New York Mercantile Exchange.

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

Elsewhere, the Canadian dollar was down sharply the euro, with EUR/CAD climbing 1.01% to hit 1.4209.

European Union Economic and Monetary Commissioner Olli Rehn said in an interview Monday that Italy, Spain and France will not need financial bailouts, as these countries are taking “the right steps” to balance their budgets.  

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