THE TAKEAWAY: Canadian Leading Indicator Little Changed > Declines in Stock Market Index and Housing Index Offset Advance in New Durable Orders > EURCAD Rebound to be Short-lived
The Canadian Leading Indicator, comprised of ten components which lead cyclical activity in the economy, was little changed for three consecutive months, Ottawa-based Statistics Canada reported today. The reading of 0.0 percent in August was lower than the previously revised 0.1 percent in the preceding month. Meanwhile, the consensus forecast from Bloomberg survey originally showed an expectation of 0.2 percent increase.
Canadian Leading Indicator: January 2010 to Present
Prepared by Trang Nguyen
The composite leading indicator did not improve in August because four components dropped significantly that offset all the advance of other six remainders. Of four disappointing components, stock market index and housing index witnessed the largest losses, tumbling 2 percent and 0.7 percent, respectively. In contrast, new durable orders considerably advanced 3.4 percent due to a recovery from manufacturing from supply disruptions in the second quarter. Money supply and U.S. composite slightly increased 0.3 percent and 0.4 percent, respectively.
EUR/CAD 1-minute Chart: September 20, 2011
Charts created using Strategy Trader– Prepared by Trang Nguyen
The one-minute EURCAD chart above demonstrated immediate traders’ bullish reaction regarding to the euro five minutes after the Canadian leading indicator released. The currency pair rapidly jumped 40 pips from 1.3570 to nearly 1.3610. However, the upward momentum did not last long. At the time this reported was written, the EURCAD fell to 1.3570, the same level before the figure was issued. Although leading indicators point to slowdown in Canada in recent months, fears of sovereign debt default in Greece and escalated banking problems in Eurozone overweighed a warning of downgrading prospects for Canadian economy, prompting currency traders to hold the loonie rather than the single currency.
Written by Trang Nguyen, DailyFX Research Team