The USD/CAD rally has been relentless this morning as plunging commodity prices have weighed on currencies like the Canadian dollar, Australian dollar, and New Zealand dollar. Meanwhile, demand for Treasuries has lead the greenback higher across the board (with the exception of USD/JPY). The release of Canadian Ivey PMI failed to have a big impact on USD/CAD, despite the stronger-than-expected reading. In fact, Ivey PMI rose to 61.0 from 51.5, though the index had been anticipated to slip to 51.0. The increase suggests that business activity accelerated during the month of September, but the breakdown of the report isn't nearly as encouraging. The employment component actually fell below 50 - signaling contraction - which bodes ill for Friday's national labor numbers. Furthermore, the price component actually rose even though commodities have traded broadly lower in recent months. Overall, Canadian growthmay appear to be faring well right now, but given the global slowdown, the export-dependent economy could feel the headwinds in late-2008 and 2009.
Source: Bloomberg