The commodity-linked currencies lead the advance versus the greenback with the Australian dollar rallying by almost 1.7% and the Canadian dollar improving by nearly 1%. The US equity bourses recovered further, as the Dow Jones posted a 0.7% gain and the Nasdaq closed higher by 1.1%. Crude oil rallied by nearly 1.2% to settle at $77.44 per barrel while spot gold firmed by 0.8% to $1,192.35.
The US economic reports released today were mixed as the June housing starts figure tumbled by more than expected, down 5% to 549k units. The May report was also downwardly revised, revealing a decline of 14.9% instead of 10% at 578k units. However, building permits in June unexpectedly improved by 2.1% to 586k units compared with 574k units in the previous month.
The Canadian dollar rallied off its two-week lows versus its US counterpart on the heels of a 1.2% advance in crude oil and the Bank of Canada's monetary policy announcement earlier in the session. The BoC, as largely anticipated, lifted its benchmark lending rate by 25-basis points to 0.75%. However, the accompanying statement from Governor Carney echoed the dovish sentiment expressed at the June meeting. The Bank continues to stress the weakness in the global economic recovery, stating that it is not yet self-sustaining and the European sovereign-debt crisis is expected to slow the global recovery over the projection horizon. The BoC also downgraded its growth outlook, reflecting a slightly weaker profile for global economic growth and more modest consumption growth in Canada. Lastly, the Bank maintained its statement that â??any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.
USDCAD hovers near 1.0435 with support starting at 1.04 backed by 1.0360 and 1.0330. Subsequent floors will emerge at 1.03, followed by 1.0270 and 1.0240. On the topside, resistance starts at 1.0470, backed by 1.05 and 1.0550. Additional ceilings are eyed at 1.0580, followed 1.06 and 1.0640.