Canada's February Leading Indicators Rose 0.6%; Loonie Pares Gain
THE TAKEAWAY: Canadian Leading Indicators Came in Line with Expectations> Surges in Financial and Manufacturing Components Compensated Declines in Housing Component and Furniture Sales> the Loonie Pares Gain
Canada’s composite leading indicators rose for the eighth straight month in February on significant gain in financial and manufacturing components. The report issued by Ottawa-based Statistics Canada today showed that the index surged 0.6 percent last month, matching with consensus forecast from Bloomberg News survey. Meanwhile, November reading was downwardly revised to a gain of 0.4 percent from an advance of 0.7 percent initially reported.
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. Six of ten registered gains in February, two reported decreases and two remained unchanged. Of six positive contributors, stock index posted a largest percentage gain, up1.7 percent, marking the first increase in five months. Likewise, another financial component money supply continued to expand 0.5 percent following 0.8 percent increase in January. Among three manufacturing components, new orders of durables goods witnessed the sizable gain in the month, rebounding 1.4 percent, contrast with 0.2 percent fall in January. The ratio of inventories to sales also rose for the fourth consecutive month. However, February average manufacturing work week index failed to gain for the first time in five months. The housing component unexpectedly declined after five monthly gains with the housing index retreating 0.4 percent. Likewise, sales of furniture and appliances slipped 0.3 percent, its sixth consecutive monthly fall.
USDCAD 1-minute Chart: March 21, 2012
Charts created using Strategy Trader– Prepared by Trang Nguyen
Canadian dollar strengthened versus most of its major trading partners ahead of the North American trading session today. Regardless, the loonie trims gain to some extent in the minutes following the leading indicator report. As can be seen from the one-minute USDCAD chart above, the USDCAD dropped about 10 pips from 0.9908 to 0.9898. The Relative Strength Indicator lying between 30- and 70- territory signaled neither overbought nor oversold reaction. At the time this report was written, Canadian dollar fell to C$0.9899 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.