- USD/CAD flubs 1.3600 once again.
- Canada Manufacturing PMI recovers but still in contraction.
- US ISM Manufacturing PMI declined, flaunting forecasts.
The USD/CAD stumbled below the 1.3600 level on Friday, following an unexpected dip in the US ISM Manufacturing Purchasing Managers Index (PMI) for February, which fell short of expectations. The broader decline in the US Dollar (USD) prompted a retreat in the USD/CAD pair, settling it back into well-known technical levels around 1.3550.
Despite a decline in Canada’s S&P Global Manufacturing PMI on Friday, the spotlight was on the crucial US data release of the day. Looking ahead, the Bank of Canada (BoC) is set to announce its latest rate decision next Wednesday, with the week concluding with another round of US Nonfarm Payrolls (NFP) on Friday, alongside labor figures from Canada.
Daily digest market movers: USD/CAD falls back into range after ISM PMI miss
- The S&P Global Manufacturing PMI for Canada in February recorded a reading of 49.7, marking an improvement from the previous 48.3. However, it remains in contraction territory, below the threshold of 50.0.
- In February, the US ISM Manufacturing PMI declined to 47.8, contrary to the anticipated increase from 49.1 to 49.5 as forecasted.
- The ISM Manufacturing PMI for February dropped to 47.8, falling short of the expected 49.5.
- The University of Michigan Consumer Sentiment survey index dipped to 76.9 in February, missing the expected steadiness at the previous 79.6.
- The ISM Manufacturing Prices Paid also saw a slight decline, reaching 52.5, below the anticipated 53.0 and the previous month’s 52.9.
- Softening data is fueling investor risk appetite, as rising inflation figures increase the likelihood of a Federal Reserve (Fed) rate cut.
- The Federal Reserve’s Monetary Policy Report indicates that inflation expectations align broadly with the 2% goal.
Technical analysis: USD/CAD drifts back into the bottom end of near-term congestion below 1.3600
USD/CAD retreated from an intraday peak near 1.3600 to revisit 1.3550 on Friday, underscoring the ongoing struggle for near-term consolidation in the pair. The presence of a substantial supply zone at the 1.3600 mark is constraining the bullish momentum.
Despite maintaining higher highs, the daily candlesticks depict a generally bullish stance. However, USD/CAD continues to grapple with the challenge posed by the 200-day Simple Moving Average (SMA) at 1.3477. The absence of substantial upside momentum may result in the pair returning to consolidation around the long-term moving average unless buyers can convincingly breach the 1.3600 level.
