Canadian dollar little changed

The Canadian dollar traded sideways against the US dollar on Friday, finding little direction from a mixed bag of North American data, in thin trade ahead of the extended Christmas holiday weekend. On the domestic front, Canada's economy stalled in October after four consecutive months of growth, pointing to a fourth-quarter slowdown as increasing global uncertainty mutes expectations for next year.
South of the border, US consumer spending was tepid in November and a gauge of business investment fell for a second straight month, suggesting the economy lost some of its recent momentum. But there were new signs of improvement in the housing market, and other indicators have recently pointed to a rosier US economic outlook.
The Canadian dollar ended the North American session at C$1.0208 to the US dollar, or 97.96 US cents, just three ticks better than Thursday's North American close at C$1.0211 to the US dollar, or 97.93 US cents. It finished the week 1.6 percent stronger.
"The Canadian dollar remained parked just above 98 cents as traders preferred to kick off the Christmas festivities, happily ignoring economic data releases from both Canada and the US," said Michael O'Neill, vice-president of foreign exchange trading at RJOFX Canada.
"A lack of negative headlines from Europe was the key reason that the tepid risk-seeking rally remained intact, as what few investors still around sold US dollars to unwind safe haven trades." O'Neill said the short-term technical picture for the Canadian dollar was still bearish after hitting C$0.9410 to the US dollar at the end of July. He noted a move stronger than C$1.0080 would negate the weaker trend and argue for a re-test of C$0.9890.
Jennifer Lee, senior economist at BMO Capital Markets, said the lacklustre economic data did not do much to encourage holiday-thinned markets. Canada's growth-related currency pared earlier gains following the reports, but still stayed stuck in a tight 30-odd basis point range.
US data on Thursday showed the number of Americans filing new claims for jobless benefits hit a 3-1/2 year low last week, bolstering views the US economy was gaining momentum, even though separate data showed third-quarter economic growth was revised down. The jobs report was still seen benefiting global risk sentiment, including overseas equities, early on Friday, and supporting Canada's currency.