Summary:

• CAD surges despite a weaker than previously manufacturing PMI
• CAD could strengthen against the greenback given a technical analysis

The USDCAD has resumed its downtrend despite a few adverse factors which seem to be played down. First and foremost, oil prices are hovering around the break-even on a daily basis. Secondly, the US dollar is remaining quite firm against major currencies. Last but not least, the Canadian manufacturing PMI turned out to be weaker than the prior one. 

The Canadian PMI came in at 54.7 while the previous release was 55.1. Either way, it’s the 16th consecutive month of expansion as the gauge maintains above a 50 level which divides contraction from economic expansion. Cutting to the chase, a new orders subindex declines to 55.1 from 55.7 being the lowest since January 2017. Moreover, an employment subindex proved to be the lowest since March this year. 

The Canadian PMI remains above 50 pts. which bodes quite well for domestic industrial output going forward. Source: Bloomberg

Given that industry accounts for a lion’s share of the Canadian economy today’s reading could reassure investors who are interested in investing the CAD in the longer-term allowing for a shift which has occurred in the BoC lately. 

Taking a glance at the chart it looks like a dive of prices which have managed to break through the local lows. The current price action could suggest that the pair could keep up decreasing towards 1.2830 or below. 

 The USDCAD is diving despite a few adverse factors standing behind strength of the US dollar. Source: xStation5

At the end of the day, let us recall our longer-term view with regard to the pair which we set out a few days ago.