Investing.com - The U.S. dollar ended the week close to four-year highs against the Canadian dollar on Friday as a raft of U.S. data indicated that the U.S. economic recovery is strong enough for the Federal Reserve to keep tapering its stimulus program.
USD/CAD rose to highs of 1.0982, before settling at 1.0960, 0.29% higher for the day, and not far from the four year high of 1.0990 struck on Wednesday. For the week, the pair gained 0.74%.
The pair is likely to find support at 1.0904, Thursday’s low and resistance at 1.1000.
Data released on Friday showed that U.S. industrial production rose 0.3% in December, in line with expectations, rising for the fifth successive month.
Another report showed that U.S. housing starts fell 9.8% last month, more than the 8.3% decline forecast by analysts. U.S. building permits rose less-than-expected in December, but remained close to November’s five year highs.
Separately, data showed that the University of Michigan's consumer sentiment index ticked down to 80.4 in January from 82.5 in December. Analysts had expected the index to rise to 83.5.
Earlier in the week, data showed that U.S. retail sales posted a larger than expected gain in December.
The data indicated that while the recovery in the U.S. remains uneven, the economic outlook is continuing to improve. The dollar has strengthened broadly since the Fed announced its decision in
December to scale back its asset purchase program, cutting it by USD10 million, to USD75 billion-per-month.
The loonie was pressured lower by expectations that the Bank of Canada will stick to its dovish stance on rates at its upcoming policy meeting after a recent series of weak economic data sparked doubts over the economic outlook.
In the week ahead, Wednesday’s rate statement by the BoC will be in focus, while U.S. data on jobless claims and home sales will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 20
Markets in the U.S. are to remain closed for the Martin Luther King Day holiday.
Tuesday, January 21
Canada is to produce data on wholesale sales and manufacturing sales.
Wednesday, January 22
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement and monetary policy report. The announcement is to be followed by a press conference.
Thursday, January 23
Canada is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is release the weekly report on initial jobless claims and a private sector report on existing home sales.
Friday, January 24
Canada is to round up the week with data on consumer price inflation.