Forex - USD/CAD erases gains after ISM PMI rises

Forex News – The U.S. dollar erased gains against its Canadian counterpart on Monday, easing back from a one-year high after a report showed that U.S. manufacturing activity rose unexpectedly in September.

USD/CAD pulled away from 1.0523, the pair’s highest since September 3, 2010, to hit 1.0457 during early U.S. trade, shedding 0.44%.

The pair was likely to find support at 1.0349, last Friday’s low and resistance at 1.0655, the high of September 1, 2010.

The Institute of Supply Management said its manufacturing purchasing managers’ index rose to 51.6 from 50.6 in August, confounding expectations for the reading to tick down to 50.5.

But market sentiment remained on the back foot as concerns over the potential impact of a Greek default on Europe’s already fragile banking sector mounted after the Greek government said Sunday it will miss its deficit reduction targets for both this year and next.

The Canadian dollar also remained under pressure as crude oil for delivery in November tumbled 1.82% to trade at USD77.69 a barrel on the New York Mercantile Exchange.

Raw materials, including oil account for about half of Canada’s export revenue.

Meanwhile, the loonie was higher against the euro, with EUR/CAD falling 0.77% to hit 1.3952.

Also Monday, euro zone finance ministers were meeting to discuss options for increasing the capacity of the region’s bailout fund, the European Financial Stability Facility.