USD/CAD eases off 1.12 on mixed economic data
The US dollar declined against its Canadian counterpart on Wednesday, as mixed economic data kept the greenback’s rally contained.
The USDCAD reached an intraday high of 1.1222, the pair’s highest level since the end of March. It would subsequently consolidate at 1.1177, declining 0.2 percent. Initial support is likely found at 1.1146 and resistance at 1.1235.
The Canadian dollar was on its heels Tuesday after the federal statistics agency said the country’s economy was flat in July. Canada’s overall economy registered zero growth in July, following increases of 0.5 percent and 0.3 percent in May and June, respectively.
Separately, Canada’s manufacturing sector grew in September for the seventeenth consecutive month, albeit at a slower pace than in August, the Royal Bank of Canada reported today. RBC’s monthly gauge of manufacturing activity reached 53.5, easing from August’s nine-month high of 54.8.
On Friday Statistics Canada will report on the country’s trade balance. Canada’s trade surplus is forecast to shrink in August to $1.6 billion, down from a nearly six-year high of $2.6 billion the previous month. Motor vehicle and parts shipments led the increase in July. Exports in this category rose 9.7 percent to $6.9 billion.
The Bank of Canada is relying heavily on exports to drive the nation’s recovery. A brighter economic outlook in the United States, combined with a weaker Canadian currency, is helping Canada’s export sector gather momentum in the second half of the year.
Canada’s exports rose 4.2 percent in the second quarter, which translated into an annualized 17.8 percent. That was the biggest gain in almost three years.
In US data, private sector employment rose faster than forecast in September, a sign the labour market was continuing to build momentum in the second half of the year.
Private payroll employment increased 213,000 in September, following a gain of 202,000 the previous month, the ADP Institute reported today. Economists forecast a monthly gain of around 210,000.
Strong contributions from both goods-producers and service providers led the gains in September. The goods-producing sector, which includes manufacturers and construction companies, increased payrolls by 58,000. The service economy, which includes professional/business services, financial activities and transportation, saw total employment rise 155,000.
The Labor Department’s official nonfarm payrolls report on Friday is expected to how the economy added 215,000 jobs in September, the seventh time in eight months jobs growth was above the 200,000 mark.
The strong jobs report was offset by disappointing manufacturing data. Two separate gauges of US manufacturing activity registered declines in September. ISM’s national manufacturing index declined 2.4 percentage points to 56.6, as new orders eased. However, the closely monitored index suggested the manufacturing industry maintained its robust growth pace at the end of the third quarter.
Markit Group’s gauge of US manufacturing declined 0.4 percentage points to 57.9, as job growth reached its highest level in two-and-a-half years.
Separately, US construction spending unexpectedly declined in September, following a drop in public sector investment and nonresidential construction.
The total value of construction put in place dropped 0.8 percent to $960.96 billion, following a downwardly revised gain of 1.2 percent the previous month.
Sorry. No data so far.