Investing.com - The U.S. dollar slumped to five-and-a-half month lows against the Canadian dollar on Friday, following the release of stronger-than-forecast data on Canadian inflation and retail sales.
USD/CAD was down 0.56% to 1.0757 late Friday, the weakest level since January 7. For the week, the pair lost 0.93%.
The pair is likely to find support at 1.0725 and resistance at 1.0825, Friday’s high.
The Canadian dollar surged after Statistics Canada reported that the annual rate of inflation rose to 2.3% in May, ahead of forecasts of 2.1%.
It was the first time in more than two years that the annual inflation rate exceeded the Bank of Canada’s 2% target, fuelling optimism over the economic recovery.
The BoC kept its benchmark interest rate on hold at 1% earlier this month, reiterating concerns that low inflation and weak exports are acting as a drag on growth.
Consumer prices were 0.5% higher in May from a month earlier, beating forecasts for 0.2%.
The loonie, as the Canadian dollar is also known, received an additional boost after a separate report showed that domestic retail sales jumped 1.1% in April, easily outstripping forecasts of 0.4%.
The greenback remained under pressure after the Federal Reserve indicated that rates would remain on hold despite the improving U.S. economic outlook.
At the conclusion of its two-day policy meeting on Wednesday the central bank cut its bond purchases by $10 billion, to $35 billion a month, saying there was "sufficient underlying strength" in the U.S. economy to continue tapering.
Despite this, the Fed lowered its forecast for growth this year due to "unexpected contractions" in the first quarter as a result of the unusually harsh winter.
The Fed acknowledged the recent increases in inflation and drop in unemployment, but Chair Janet Yellen said no formula was in place for when interest rates would start to rise.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up to 80.41 late Friday from lows of 80.24 on Thursday. For the week, the index lost almost 0.3%.
In the coming week, the U.S. is to release data on consumer confidence, durable goods orders and home sales, while Canada is not scheduled to release any major economic reports.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, June 23
The U.S. is to release a preliminary report on manufacturing activity and private sector data on existing home sales.
Tuesday, June 24
The U.S. is to release private sector data on consumer confidence, as well as a report on new home sales.
Wednesday, June 25
The U.S. is to publish data on durable goods orders, in addition to revised data on first quarter growth.
Thursday, June 26
The U.S. is to release data on personal income and expenditure, as well as data on inflation linked to personal spending.
Friday, June 27
Canada is to release a report on raw material price inflation.
The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan.