- Canadian Dollar turns bearish as broader markets go risk-off.
- Canada Manufacturing PMI declined on Monday to 47.5.
- Rest of the week to be determined by US Dollar flows heading into another NFP Friday.
The Canadian Dollar (CAD) fell 0.76% against the US Dollar (USD) on Monday, sending the USD/CAD into 1.3680 to kick off the new trading week. The pair now heads into Tuesday's market session testing the waters into four-week highs, tapping 1.3685 after Monday saw the USD/CAD rise over 100 pips inside a single trading day, the USD's best single-day performance against the beleaguered CAD since mid-July's rebound from 1.3110.
The Canadian Manufacturing Purchasing Manager Index (PMI) declined from 48 to 47.5 on Monday, further draining support for the Loonie and helping to prop up the USD/CAD pair even higher. Next up for the CAD on the economic calendar will be Thursday’s Ivey PMI for September, which is forecast to decline from 53.5 to 50.8.
Daily Digest Market Movers: Canadian Dollar extends declines against Greenback, USD/CAD testing 1.3685
- Risk appetite has soured further on Monday, driving the US Dollar Index (DXY) higher across the entire market.
- The CAD is slipping as Greenback gains couple neatly with a backslide in Crude Oil prices, kicking the legs out from underneath CAD support.
- Oil-dependent CAD is finding little support in markets as Canadian PMIs continue to worsen, exacerbating concerns about a slowdown in the Canadian domestic economy.
- Market flows and US data are set to drive the USD/CAD into the mid-week with little of note on the economic calendar for CAD traders until Thursday’s Ivey PMI.
- Canadian labor data on Friday is set to be overshadowed by the US Non-Farm Payrolls (NFP).
- DXY flows are being guided by US Treasury yields, and currency traders will want to keep an eye on bond markets to determine directional shifts in the US Dollar.
- USD/CAD traders will also want to watch Wednesday’s US ISM PMI figures on Wednesday
Technical analysis: Canadian Dollar declines against the US Dollar, USD/CAD heading for 1.3700
The USD/CAD pair is trading into 1.3675 on Monday, climbing over a hundred pips from the day’s bottom and extending the topside run that started from Friday’s lows near 1.3420.
The USD/CAD has climbed over 1.8% in two trading days and is poised for further gains as the pair shakes loose from recent bearish momentum.
September’s swing low into the 1.3400 handle saw technical support arrest declines and spark a reversal from the 200-day Simple Moving Average (SMA) currently sitting on the high side of 1.3450, and the US Dollar’s broad-market rebound has sent the USD/CAD pair back into September’s peaks near 1.3700.
USD bulls will be looking to gather enough momentum to make a decisive break of 1.3700, while CAD bidders will be looking for a way to send the pair back into the 34-day Exponential Moving Average (EMA) just north of 1.3500.