The Canadian dollar has posted slight losses in the Monday session. Currently, USD/CAD is trading at 1.2811, up 0.27% on the day.
Manufacturing PMI slows in January
Canada’s manufacturing sector continues to expand, but Manufacturing PMI slowed to 54.4 in January, down from 57.9 beforehand. The lower reading can be attributed to new health restrictions due to a resurgence in Covid-19. The Canadian dollar has shown a muted response to the PMI.
Canada GDP beats expectations
The week ended on a positive note, as the Canadian economy expanded at a faster clip than expected in November. Unlike most major countries, Canada release GDP reports on a monthly, rather than quarterly basis. In May, the economy registered an impressive growth rate of 6.5%, but since then GDP has steadily dropped. The resurgence of Covid has prompted lockdowns and curfews which are having a negative effect on economic activity. GDP slowed to a weak 0.4% in October, and an identical gain was expected for November. However, GDP surprised with a strong gain of 0.7%, as manufacturing and retail trade were stronger.
Final figures won’t be in until March, but Canada’s official statistics agency has projected that GDP will contract by some 5.1% in 2020, which would make it by far the worst year on record. The economy has made major strides since the economic meltdown in March and April, but the recovery has been uneven, which has resulted in a K-shaped recovery, as some sectors lag behind others.
- USD/CAD faces resistance at 1.2857. Above, there is resistance at 1.2935
- The first line of support is at 1.2720. This is followed by support at 1.2661
- The 50-day moving average (MA) is at 1.2999, just shy of the symbolic 1.30 level
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.