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Canadian Dollar Rallies on Impressive Rebound in Economic Activity

Canadian Dollar Rallies on Impressive Rebound in Economic Activity

Benjamin Spier, Technical Strategist

Talking Points:

  • Ivey PMI reported at 56.8 for January, well above expectations
  • The prior month’s PMI was released at 46.3, a 4-year low
  • USD/CAD falls back below 1.1100 on Loonie strength

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The Canadian Dollar rose 25 pips against the US Dollar on the release of a vastly improved Ivey Purchasing Managers Index for January.

The PMI was reported at 56.8, beating expectations for 51.0 and significantly higher than December’s 46.3 index level, which was the lowest in over four years. A PMI reported above 50.0 indicates expansion in economic activity.

Economic data has risen in importance for CAD traders since the Bank of Canada said in January that the direction of its next rate move depends on data flow. In October, the BoC lowered its growth forecast for 2014 to 2.3% from 2.7%. Therefore, improved economic releases may drive the Loonie higher, as was seen today following the PMI release.

At the time of this writing, USD/CAD has erased earlier gains and is trading right near the daily open at 1.1082. The 8-day low at 1.1036 may next provide support in USD/CAD trading.

New to Forex? Watch this video

USD/CAD 1-Minute: February 6, 2014

Canadian_Dollar_Rallies_on_Impressive_Rebound_in_Econominc_Activity_body_Picture_1.png, Canadian Dollar Rallies on Impressive Rebound in Economic Activity

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to instructor@dailyfx.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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