The loonie remains range bound at the top of the week ahead of U.S. employment data. U.S. ISM and construction data was mixed for the USD while the Canadian PMI was CAD positive. The U.S. manufacturing PMI came in lower than at 50.8, barely above what is considered expansion. The survey of purchasing managers surprised to the upside last month, and now appears to have lost momentum. U.S. construction on the other hand rose to a 8 and a half year high in the data release for March at 0.3 percent after an also upward revision to February figures to 1.0 percent gain.
Canadian factories received good news after the release of the RBC Manufacturing PMI rose to 52.2 in April. The previous reading was 51.5 and the improvement was credited to new orders from U.S. importers. This is good news for the Bank of Canada as their anticipated manufacturing recovery is being driven by a weaker loonie, but as oil prices recover the loonie could erase that competitive edge going forward.
Global manufacturing has been mixed with only slight gains in Europe and Canada not countering the losses in Japan and emerging markets. The surge in oil prices has come at a right time combined with a weaker dollar could boost U.S. manufacturing and kick start a global revival out of the slow growth “new normal”
The USD/CAD has retreated 0.147 percent in the last 24 hours. The pair is trading at 1.2536 near 10 month lows after the price of oil rebounded with the oil agreement production freeze talks still ongoing. The USD has lost traction after the April FOMC did not put a strong signal on a June Rate hike. U.S. data has been weak and major pairs have all advanced on the dollar.
The Canadian economic calendar kicks off on Tuesday with the Bank of Canada (BoC) Governor Stephen Poloz to speak at a panel in the Milken Institute’s Global Conference in Los Angeles to address the topic of central bank actions and remaining ammunition. Canada’s trade data will be released on Wednesday, May 5 at 8:30 am EDT. The Canadian economy is expected to show a trade deficit forecasted at $1.2 billion after the CAD bounced back in the third week of January and hasn’t looked back. Employment data from the U.S. and Canada will close the trading week. The U.S. non farm payrolls (NFP) is expected to remain above 200,000 new jobs and for Canada a little retracement is anticipated after the 40,000 new jobs surge last month.
Cad events to watch this week:
Tuesday May 3
12:30pm CAD BOC Gov Poloz Speaks
Wednesday May 4
8:15am USD ADP Non-Farm Employment Change
8:30am CAD Trade Balance
10:00am USD ISM Non-Manufacturing PMI
10:30am USD Crude Oil Inventories
Thursday May 5
8:30am USD Unemployment Claims
Friday, May 6
8:30am CAD Employment Change
8:30am CAD Unemployment Rate
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change
8:30am USD Unemployment Rate
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar