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Loonie Set for Short-Term Rebound?

H.S. Borji
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Loonie Set for Short-Term Rebound?

The Canadian dollar was trading higher Monday amid signs the Canadian economy was back on track at the start of the year. Canada’s currency faces a potentially active data wire this week, headlined by PMI and unemployment data.

Canada’s gross domestic product expanded 0.5 percent in January, the government’s statistics branch reported today from Ottawa. Economists forecast a rebound of 0.4 percent after GDP contracted 0.5 percent in December. Monday’s data show Canada is still on track to hit its growth target of 2.5 percent for the year.

The Richard Ivey School of Business is scheduled to release Canada’s business PMI Friday. The closely followed release provides investors with a broad gauge of the Canadian economy. Economists forecast the headline PMI reading to have risen 1.1 percentage points to 58.3 in March. A reading above 50 is a general sign of expansion in business activity.

Statistics Canada will close out the week with a key employment report. Canadian employers added more than 25,000 jobs in February, after shedding 7,000 jobs the previous month, according to a broad consensus of market analysts. The unemployment rate remained unchanged at 7 percent.

The USDCAD pair fell to a daily low of 1.1006, before rebounding slightly to 1.1019 in the US morning session. This represents a loss of nearly 0.4 percent. The pair, having lost more than 1.2 percent over the past five days, hit a daily high of 1.1070.

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