USD/CAD stays in positive territory as red flags on Canadian economy mount
- Manufacturing sales in Canada declined in March.
- Industrial production loses momentum in the U.S.
- US Dollar Index struggles to recover above 97.
The USD/CAD pair is struggling to take advantage of the upbeat market sentiment on Tuesday as the latest data from Canada remind investors of the slowdown in the Canadian economy in the first quarter of 2019. As of writing, the pair was up 0.04% on the day at 1.3374.
Statistics Canada today reported that manufacturing sales in February declined by 0.2% on a monthly basis in February to fall short of the market expectation for a no-change, confirming the dismal tone in the Bank of Canada's Business Outlook Survey that was released yesterday. "The Business Outlook Survey indicator decreased from a strongly positive level in the winter survey and is now slightly negative, suggesting a softening in business sentiment," the BoC said.
On the other hand, the Fed announced that industrial production in the U.S. declined by 0.1% in March to miss the analysts' estimate of +0.2% and made it difficult for the greenback to gather strength against its rivals. With the US Dollar Index struggling to make a decisive break above the 97 mark, the pair's upside stays limited for now.
On Wednesday, inflation data from Canada will be the next significant catalyst on the CAD's market valuation. “The surge in gasoline prices during the month may have led the headline price index to rise 0.7% m/m (not seasonally adjusted). This would allow the annual inflation rate to rise 4 ticks to 1.9%. The annual rate of CPI-common, meanwhile, may have stayed put at 1.8%,” NBF analysts said previewing the data.
Technical levels
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
