Daily Currency Update

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Could manufacturing sales be a crystal ball?

CAD - Canadian Dollar

Manufacturing sales rose by a record 20.7% to $48.7 billion in June, following an 11.6% increase in May, according to the monthly survey released by StatCan.

The data came in higher than expected, and that’s always good for the Canadian dollar. Manufacturing Sales is considered a leading indicator of economic health. Manufacturers are quickly affected by market conditions, and changes in their sales can be an early signal of future activity such as spending, hiring, and investment.

USD/CAD is trading near its 1 month low. At the time of writing, it traded at 1.325.

Key Movers

The Australian dollar drifted lower through trade on Thursday, following a dour unemployment print. At first glance numbers appeared promising with 114,000 jobs added to the economy and only a marginal uptick in official unemployment levels, but a deep dive into the specifics paints a gloomy picture. Of the jobs added to the economy over 60% were part time and suggest a growing underemployment concern. While hours worked are increasing there is still a large portion of the workforce seeking more and as COVID-19 hotspots delay the broader re-opening of the economy it is likely we will see depressed labor market numbers through the months ahead, especially as this reporting period has not taken into account Melbourne’s stage 4 lockdown. Having drifted below 0.7150 the AUD touched intraday lows at 0.7135.

Trader’s sentiment has shifted as of late in the UK. GBP got a lift on Thursday after Irish Prime Minister Michael Martin commented on Brexit. He said that he thought there was a ‘landing zone’ for the UK and EU to come to an agreement. Coupled with the Michael Barnier’s positivity last week around a potential deal, there is a lot more optimism surrounding this round of negotiations, hence why GBP is still sitting above the 1.30 handle against the USD. The negotiations will kick off again Monday. Analysts predict a 2-3% short term dip with signs of a significant Brexit roadblock however an upside of 5-6% if things go well. This could leave GBP/USD trading just below 1.40 by the end of the year, which would be the highest since the Brexit vote in 2016.

Expected Ranges

EUR/CAD: 1.560 - 1.568 ▼

GBP/CAD: 1.725 - 1.739 ▲

AUD/CAD: 0.943 - 0.950 ▲

USD/CAD: 1.320 - 1.326 ▲