The Canadian dollar continues to make inroads against its US cousin. USD/CAD is trading at 1.3251, down 0.36% on the day. It has been a good week for the Canadian dollar so far, as USD/CAD is down 0.98%.
Is Canada’s economy on an upswing?
There are signs that the Canadian economy is gaining some steam, after the economy was hit hard by the Covid-19 pandemic. There was impressive employment data at the end of last week. In July, the economy created 418.5 thousand jobs, above the estimate of 395.0 thousand. The unemployment rate fell sharply to 10.9%, down from 12.3% beforehand. On Tuesday, Housing Starts jumped to 246 thousand, up from 212 thousand in the previous release. This figure easily beat the forecast of 208 thousand.
The Canadian dollar received a further boost on Wednesday, as US Crude Inventories showed a drawdown of 4.5 million barrels, marking a third straight decline. Low stockpile means upward pressure on oil prices, which is bullish for the Canadian dollar, as the country is a major oil producer. Finally, Canada’s manufacturing sector is looking healthier. After a plunge of 28.5% in April, Manufacturing Sales bounced back with a gain of 10.7% in May. The estimate for the June release, which will be published on Friday, stands at 16.4%. If we continue to see strong Canadian fundamentals, the Canadian dollar could make further inroads against the greenback.
USD/CAD move slightly higher in the Asian session but then gave up these gains. The pair posted considerable losses in European trade but has reversed directions in the North American session.
- 1.3348 in the next resistance line. This is followed by resistance at 1.3399
- USD/CAD is testing support at 1.3258. The next level is 1.3219
- The pair broke through the 10-day MA line, which is a bearish signal