The Canadian dollar is showing limited movement in the Tuesday session. In the North American session, the pair is trading at 1.3060, up 10% on the day.
Canada, US Manufacturing PMIs head higher
Manufacturing activity accelerated in August on both sides of the border. Canada’s Manufacturing PMI improved to 55.1, up from 52.9 beforehand. This was the strongest reading since October 2018. The 50-level separates expansion from expansion. In the US, ISM Manufacturing PMI rose from 54.2 to 56.0, beating the forecast of 54.6. This reading was the highest since January 2019, another sign of growth by the US economy.
The US dollar remains under broad pressure, following remarks from Jerome Powell that the Federal Reserve would allow inflation levels to exceed the two percent target after periods of weakness, as long as “average” inflation levels stay at two percent. The Canadian dollar is coming off an excellent August, with gains of 2.7%. This was the currency’s best monthly performance since June 2019. With the US dollar in a deep rut, the Canadian dollar could enjoy another positive week.
USD/CAD Technical
- 1.3097 is the next resistance line. This is followed by resistance at 1.3145
- 1.3010 is the first support line, protecting the symbolic 1.30 level. The next support level is 1.2971
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