USD/CAD ended Friday’s session at 1.0358, down 0.38% for the day, after rising to five-week highs of 1.0418 on Thursday. For the week, the pair gained 0.43%.
The pair is likely to find support at 1.0306, the low of October 8 and resistance at 1.0411, Friday’s high.
The greenback found support as House Republicans and the Obama administration began a second day of negotiations on a deal to reopen the government and raise the U.S. debt ceiling in the short term.
The U.S. risks running out of cash if the government borrowing limit is not raised by 17 October.
Meanwhile, concerns over the economic impact of the political deadlock in Washington fuelled expectations that the Federal Reserve will further delay plans to start phasing out its USD85 billion a month asset purchase program.
Wednesday’s minutes of the Fed’s September meeting said the decision not to begin tapering stimulus was a "close call," with all but one voting member opting to leave the program unchanged.
Data released on Friday showed that U.S. consumer sentiment fell to the lowest level in nine months in October, as concerns over the impact of the government shutdown weighed.
The University of Michigan’s consumer sentiment index declined to 75.2 from a final reading of 77.5 in September, and below expectations for a reading of 76.0.
The Canadian dollar was boosted after data released on Friday showed that the country’s unemployment rate declined to an almost five year low in September.
Statistics Canada said the economy added 11,900 jobs last month, more than expectations for jobs growth of 10,000. The unemployment rate ticked down to 6.9% from 7.1% in August.
In the week ahead, investors will continued to closely monitor political developments in Washington. Trade volumes will be thin on Monday, with markets in the U.S. and Canada closed for holidays.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 14
Markets in the U.S. and Canada are to remain closed for the Thanksgiving holiday.
Tuesday, October 15
The U.S. is to release a report on manufacturing activity in the Empire state.
Wednesday, October 16
Canada is to produce data on manufacturing sales, a leading economic indicator.
Thursday, October 17
The U.S. is also to release data on industrial production and manufacturing activity from the Philly Fed.
Friday, October 18
Canada is to publish data on consumer price inflation, which accounts for the majority of overall inflation.
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