- USD/CAD rises to 1.3700 as US Dollar recovers with US ISM Manufacturing PMI in focus.
- An expected decline in US core PCE inflation boosts hopes for Fed rate cuts.
- A bigger-than-expected rise in Canadian inflation dampens hopes for consecutive BoC rate cuts.
The USD/CAD pair extends its upside towards the round resistance level of 1.3700 in the American session on Monday. The pair strengthens as the US Dollar (USD) recovers more than half of its intraday losses after posting a new three-day low near 105.40.
Market sentiment remains positive as investors expect the Federal Reserve (Fed) to start cutting interest rates starting from the September meeting. S&P 500 futures are posting significant gains in European trading hours. The US Dollar Index (DXY), which tracks the value of the USD against six major currencies, is recovering near 105.75. US 10-year Treasury bond yields are jumping near 4.45%.
Expectations for Fed rate cuts in September were boosted by soft data on the core U.S. Personal Consumption Expenditures (PCE) price index for May. The annual core PCE data, which is the Fed’s preferred inflation measure, grew at a slower pace of 2.6%, as expected, from the previous release of 2.8%.
On the economic front, investors are awaiting the US ISM Manufacturing PMI for June, which will be released at 14:00 GMT. The PMI report is expected to show that output in the manufacturing sector improved to 49.0 from the previous release of 48.7, but remained below the 50.0 threshold.
Meanwhile, the Canadian dollar is weakening despite higher-than-expected inflation data for May, which lowered expectations for further rate cuts by the Bank of Canada (BoC). The BoE started its rate-cutting cycle since June.
Economic indicator
ISM manufacturing PMI
He Institute of Supply Management (ISM) publishes the manufacturing index which shows business conditions in the United States manufacturing sector, taking into account expectations for future production, new orders, inventories, employment and deliveries. It is a significant indicator of overall American economic activity. A reading above 50 points indicates expansion in economic activity, while a reading below 50 points implies a decrease in activity. A result higher than expected is bullish for the dollar, while a result lower than the consensus is bearish.
Next post: Mon Jul 01, 2024 14:00
Frequency: Monthly
Dear: 49.1
Previous: 48.7
Fountain: Institute for Supply Management
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) provides a reliable perspective on the state of the U.S. manufacturing sector. A reading above 50 suggests that business activity expanded during the period. the survey and vice versa. PMIs are considered leading indicators and could indicate a change in the economic cycle. Stronger than expected results generally have a positive impact on the USD. In addition to the headline PMI, the Employment Index and Prices Paid Index numbers are being watched closely as they shed light on the labor market and inflation.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
