- USD/CAD slumps more than 1.20% on Monday as sentiment improves.
- Manufacturing activity in the US slowed down but continued to grow.
- Canada’s manufacturing PMI improved but remained below 50, signs of an ongoing economic slowdown that is attributed to high interest rates.
The USD/CAD fell from two-year highs around 1.3837, plummeting 200 points on Monday, as the US dollar weakened overall as sentiment turned positive due to the UK budget turnaround. Rumors of a global oil production cut fueled a jump in oil prices, reinforcing the oil-linked loonie. At the time of writing, the USD/CAD is trading at 1.3649, down 1.25%.
European and US stocks continue to recover after falling towards year lows. After the opening of Wall Street, the Manufacturing PMI for the month of September was released, showing that activity, although slowed down, remained in expansion territory, at 50.9, below the 52.8 of the previous month. Reporting the report showed New Orders fell, suggesting spending is slowing, while Prices Paid declined to 51.7, the lowest reading since June 2020, from 52.5 in August.
On the Canadian side, the S&P Global Manufacturing PMI for September jumped to 49.8, improving compared to August’s reading of 48.7. According to the report, new orders slowed to a faster pace, affecting prices paid by producers. In addition, high interest rates and the weak economic situation caused customers to refrain from placing orders.
Elsewhere, the Dollar Index continues to weaken across the board, with DXY losing 0.27% to 111.869, which is a headwind for USD/CAD. Additionally, traders should keep an eye on crude oil prices, with WTI rising 3.13% to $82.63 per barrel, a tailwind for the Canadian dollar.
What must be considered
The Canadian agenda will include Bank Governor Tiff Macklem’s speech on Thursday, along with employment figures on Friday. In the US, the calendar will reveal Durable Goods Orders along with JOLT job openings on Tuesday, ahead of the September Non-Farm Payrolls report due on Friday.
USD/CAD Key Technical Levels
Source: Fx Street
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