Canadian Dollar Gains, But Upcoming Ivey PMI, Employment Data Could Take a Toll
The Canadian dollar was one of the stronger major currencies on Friday, as USD/CAD moved down toward support at 1.23, where there is a rising trendline connecting the October 14, 2008, January 2009 and March 2009 lows. However, the tide could turn for the Canadian dollar next week. At 10:00 ET on April 6, Canada’s Ivey Purchasing Managers’ Index (PMI) is forecasted to have risen to 46.9 in March from 45.2, which would mark the second straight increase. That said, since this gauge of conditions in the manufacturing sector is expected to remain below 50, the index will reflect a further contraction in business activity for the fifth straight month, albeit at a slower pace. Overall, this PMI release is likely to add to evidence that the decline in oil prices has taken its toll on Canadian economic growth, but the index may only impact the Canadian dollar if it rises back above 50, or if it surprisingly dives toward January’s record low of 36.1.
At 7:00 ET on April 9, the Canadian net employment change is forecasted to have fallen by 57,500 during March, marking the fifth straight month of job losses. Furthermore, the unemployment rate is anticipated to have risen to match January 2002 high of 8.8 percent from 7.7 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Canadian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.
Check out the Daily Fundamentals in its entirety for a look at what happened throughout the FX markets today.