Investing.com - The U.S. dollar trimmed gains against its Canadian counterpart on Friday, pulling back from a nearly six-year high after the release of positive Canadian retail sales and inflation data, although market sentiment remained under pressure.
USD/CAD pulled away from 1.2456, the pair's highest since April 2009, to hit 1.2418 during early U.S. trade, still up 0.29%.
The pair was likely to find support at 1.2310, Thursday's low and resistance at 1.2715.
In a report, Statistics Canada said that retail sales rose 0.4% in November, exceeding expectations for an uptick of 0.1%, after a flat reading the previous month.
Core retail sales, which exclude automobiles, increased by 0.7% in November, compared to expectations for a 0.5%. October's figure was revised to a 0.1% rise from a previously estimated 0.2% gain.
A separate report showed that Canada's consumer price inflation slipped 0.7% in December, confounding expectations for a 1.0% decline, after a 0.4% fall the previous month.
Core CPI, which excludes the eight most volatile items, fell 0.3% last month, in line with expectations, after a 0.2% downtick in November.
Meanwhile, the greenback remained broadly supported after European Central Bank President Mario Draghi announced on Thursday that the bank will make monthly purchases of €60 billion per month, starting in March and continuing until late 2016.
Draghi acknowledged the action the ECB took last year was “insufficient” to ward off the threat of deflation in the region.
The loonie was sharply higher against the euro, with EUR/CAD tumbling 1.02% to 1.3931.
The single currency shrugged off data on Friday showing that the Markit preliminary composite purchasing managers' index, which measures activity in the manufacturing and services sectors in the euro area, rose to 52.2 this month from a reading of 51.4 in December.
Analysts had expected the index to rise to 51.8 in January.
Later in the day, the U.S. was to release preliminary data on manufacturing activity and a private sector report on existing home sales.