The USD/CAD pair remained in rest mode as markets seek some impetus from US and Canadian data later today.
Ottawa - A sense of calm appeared over currency markets on Friday after a busy week that saw the People's Bank of China devalue the yuan on three occasions, while markets are looking ahead to data later in the day from both the US and Canada to spark some life into today's proceedings.
The loonie was up 0.04% and trading at C$1.3065 against the greenback ahead of the US open, moving in a narrow range of C$1.3047 to C$1.3084.
Later in the day investors will eye US PPI and the University of Michigan (UoM) confidence gauge. July inflation estimates point to a drop, whereas UoM expectations point to a slight upwards move. Canada is set to release manufacturing sales numbers, with a big uptick expected after May's disappointment.
On Thursday, the market was drawn to improved US retail trade figures. The US Census Bureau released data showing sales in July were up 0.6%, retail sales ex autos increased 0.4% and the core control gauge ticked 0.3% upwards, amid an improved revision of the June numbers.
The released figures were viewed positively and supported the imminent Federal Reserve (Fed) rate hike, possibly at the September meeting.
"From the Fed's perspective, Thursday's report should provide further evidence that the domestic side of the economy is becoming increasingly more self-sustaining. With labor market slack continuing to diminish and inflation expected to slowly grind higher, the case for higher interest rates is mounting," TD Economics economist Thomas Feltmate said in a research note.
"While recent international developments have resulted in markets pushing out the timing of lift-off, we still believe the US economy has garnered up sufficient strength to warrant taking interest rates off the floor as early as September of this year," Feltmate added.
In terms of the other data released on Thursday, American initial jobless claims ticked higher to 274,000 from 269,000 in the last week, while continuing claims fell to 2,273K from 2,258K previously.
"Claims continue to show no sign of an uptrend, consistent with a still-strong trend in employment growth. Indeed, at 266K, the four-week average is down from 284K, on average, during the first seven months of the year -- when payrolls gains averaged a healthy 211K per month," Jim O'Sullivan, chief US economist at High Frequency Economics, wrote on Thursday.
Business inventories showed an improved situation, growing 0.8% in June, up from 0.3% in May, whereas no expectation of a change was on the cards by analysts.
Furthermore Statistics Canada indicated new housing prices gained in June for the third month in a row, increasing 0.3% against expectations of a 0.1% move forward, largely driven by a surge in the most populated province of Ontario.
Lower oil prices added further pressure to the commodity-linked loonie, as WTI futures fell 2.38% to $42.27 per barrel and Brent futures dropped 1.43% to $49.46 per barrel.
Crude prices slipped as investors digested figures indicating China went through almost 10.12 million barrels per day (bpd) of oil in July, about 4% lower than June levels, as the country's car sales growth slowed. Also, the Energy Information Administration stated on Wednesday that US crude inventories fell by about 1.7 million barrels for the week to August 7, less than the 2 million barrel drop expected by analysts.
