Loonie Gains after Canada's December Leading Indicators Beat Estimates
THE TAKEAWAY: Canadian Leading Indicators Beat Economists’ Expectations> Surges in Manufacturing and Housing Compensated Declines in Stock Index and Furniture Sales > the Loonie Climbs versus the Dollar
Canada’s composite leading indicators rose for the fourth straight month in December on significant improvements in manufacturing, housing and employment service. According to the report issued by Ottawa-based Statistics Canada today, the index unexpectedly surges 0.8 percent in December, following an upwardly revised 0.9 percent advance in November and 0.3 percent increase in October. The reading topped consensus estimates as economists surveyed by the Bloomberg News had predicted a gain of merely 0.6 percent.
Canadian Leading Indicator: June 2010 to Present
Prepared by Trang Nguyen
The composite leading indicator comprised of ten components which significantly affect cyclical activity in the economy and together represent major categories of Gross Domestic Product. December reading beats median forecasts as gains in eight components outweighed falls in other two remainders. Of eight positive contributors, all three manufacturing components picked up. Retail sales of durable goods climbed for the sixth straight month with new orders posting a largest percentage gain of 1 percent in December, following a 3.9 percent rise in the previous month. Average manufacturing work week edges up for the third consecutive month, up 0.8 percent. Besides, money supply posted another month gain, increasing 0.7 percent. Housing, employment service and U.S. leading indicator also made positive contributions to the overall leading indicator. On the contrary, stock index continued to slump 1.6 percent in the month after declining 1.7 percent in November and slipping 2.4 percent in October. Likewise, furniture sales fell 1.1 percent, marking its fourth consecutive monthly decrease.
Charts created using Strategy Trader– Prepared by Trang Nguyen
Canadian dollar strengthened versus U.S. dollar, British Pound and Japanese Yen ahead of the North American trading session today. As can be seen from the one-minute USDCAD chart above, currency traders continues to be bullish on the loonie after December leading indicator index came in better than projected. The USD/CAD slipped approximately25 pips from 1.0095 to 1.0070. The Relative Strength Indicator touched a 70-level, an overbought territory, after fortyminutes and indicated that foreign exchange crowd was aggressively selling the greenback in favor of the loonie. At the time this report was written, Canadian dollar gained to C$1.0076 per U.S. dollar.
--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com
To contact Trang, email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.