Investing.com - The Canadian dollar backed away from one-month highs against the U.S. dollar on Friday as unexpectedly weak domestic manufacturing sales data reawakened concerns over the subdued economic outlook.
USD/CAD hit 1.0941, the lowest since January 20, before retracing those losses to end the session up 0.04% at 1.0977. For the week, the pair was down 0.71%.
The pair is likely to find support at 1.0900 and resistance at 1.1050.
The Canadian dollar gave up gains after official data showed that manufacturing sales fell 0.9% in December, confounding expectations for a 0.3% increase.
The data supported the Bank of Canada’s dovish stance on the outlook for inflation and economic growth.
The pair had been moving lower this month, retracing some of January’s strong rally, which carried the USD/CAD pair to four-and-a-half year highs.
The greenback’s gains were limited after data showed that U.S. factory output fell unexpectedly in January, clouding the outlook for the recovery.
U.S. industrial production fell 0.3% from a month earlier in January, compared to expectations for a 0.3% gain.
The unexpectedly weak data fuelled concerns that inclement winter weather is acting as a drag on growth.
A separate report showed that the preliminary reading of the University of Michigan’s consumer sentiment index for February came in at 81.2, unchanged from the final reading in January. Analysts had expected the index to tick down to 80.6.
Demand for the greenback continued to be underpinned by expectations that the Federal Reserve will continue to scale back its stimulus program.
In her first Congressional testimony since her appointment as Fed Chair, Janet Yellen said Wednesday that the central bank would continue to gradually reduce the pace of its asset purchase program.
She also reiterated that the Fed plans to hold interest rates at zero “well past” the time the jobless rate falls below 6.5%.
In the week ahead, Canadian data on retail sales and consumer inflation will be in focus. The U.S. is also to publish data on inflation, as well as reports on the housing sector and manufacturing activity.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 17
Markets in the U.S. are to remain closed for the Presidents Day holiday.
Tuesday, February 18
Canada is to produce data on foreign securities purchases.
The U.S. is to release data on manufacturing activity in the Empire State.
Wednesday, February 19
Canada is to release data on wholesale sales.
The U.S. is to publish reports on building permits, housing starts and producer price inflation.
Meanwhile, the Federal Reserve is to publish the minutes of its most recent policy setting meeting.
Thursday, February 20
The U.S. is to release the weekly report on initial jobless claims and data on consumer price inflation. The nation is also to release data on manufacturing activity in the Philadelphia region.
Friday, February 21
Canada is to publish reports on retail sales and consumer price inflation.
The U.S. is to round up the week with private sector data on existing homes sales.