The dollar fell against the majors at the start of the week, sliding to a 6-week low against the euro at 1.4248 and a one-month low versus the Canadian dollar at 1.1023. The greenback came under pressure amid gains in the US stock market, which was prompted by news that troubled lender CIT would be bailed out by bond holders and thus avert bankruptcy.
The economic calendar saw the release of the June leading economic indicators, which declined by less than expected to 0.7%, beating calls for a decline to 0.5% versus 1.2% in May. The data slated for release this week will see May home prices, weekly jobless claims, June home sales and the July University of Michigan consumer sentiment survey.
The major fx pairs are likely to remain confined within range in the upcoming week with only a handful of reports slated for release. The key highlight will be Fed Chairman Bernanke's Congressional testimony, which begins on Tuesday. Markets will be looking to Bernanke's comments to Congress on how the FOMC will begin to rein in quantitative easing in order to quell nascent inflationary fears.
Loonie Jumps to One-Month High
The Canadian dollar rallied to its highest level since mid-June against the greenback around 1.1023, benefitting from advances in commodity prices. The Bank of Canada will announce the results of its monetary policy deliberation on Tuesday, with markets expecting the BoC to stand pat on interest rates at 0.25%. However, traders will focus closely for the Bank's economic outlook and growth expectations. Also due out from Canada this week will be May retail sales.
USDCAD has declined sharply since its highs from July above the 1.17-figure, bringing the pair's June low at 1.0782 back into sights. Support begins at 1.1030, followed by 1.10 and 1.0970. Subsequent floors are eyed at 1.0940, backed by 1.09 and 1.0850. On the topside, resistance will emerge at 1.11, followed by 1.1130 and 1.1180. Additional gains will target 1.12, backed by 1.1240 and 1.1270.
Euro Bounces above 1.42
The euro edged up to a 6-week high against the dollar as traders shifted back into riskier assets. The Eurozone reports due this week will see May industrial orders, current account balance, manufacturing PMI, Germany IFO, and Germany PMI.
EURUSD will face interim resistance at 1.4250, followed by 1.43 and 1.4330. Subsequent gains will emerge at 1.4365, backed by 1.44 and 1.4450. On the downside, support will begin at 1.42, followed by 1.4170 and 1.4130. Additional floors are seen at 1.41, backed by 1.4070 and 1.4030.