USD/CAD makes a sharp U-turn, drops below 1.3250 on USD sell-off
|- Disappointing data from the United States (US) revived recession fears.
- Canada's gross domestic product (GDP) came flat in July.
- US Dollar Index dropped into the negative territory in the American session.
The USD/CAD pair rose to its highest level in a week at 1.3290 in the early trading hours of the American session on Tuesday after the uninspiring gross domestic product (GDP) from Canada weighed on the Loonie. However, with the Greenback coming under strong pressure later in the session, the pair reversed its direction and slumped into the negative territory. As of writing, the pair was down 0.05% on the day at 1.3234.
Statistics Canada today announced that the economic activity in Canada, as measured by the GDP, stayed unchanged in July and missed the market expectation for an expansion of 0.1%.
The manufacturing sector in the US weakened in September
Later in the session, the Institue for Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) plummeted to its lowest level in nearly a decade at 47.8 in September and fell short of analysts' estimate of 50.1. The dismal reading revived concerns over a possible recession in the US and caused investors to start pricing more rate cuts by the Federal Reserve before the end of the year.
The US Dollar Index, which advanced to its best level in more than two years at 99.67 today, made a sharp U-turn and erased all of its daily gains. At the moment, the index is down 0.18% on the day at 99.20. Although the Markit Manufacturing PMI's final reading for September ticked up to 51.1 from 51 in the previous estimate, it failed to help the Greenback shake off the selling pressure.
Technical levels to watch for
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