Home Daily Commentaries The Canadian dollar increases following better manufacturing data

The Canadian dollar increases following better manufacturing data

Daily Currency Update

On the economic side, manufacturing PMI came in at 49.8 versus the 49.2 expected, and it was higher than last month (48.7). The good news helped the CAD to rally against the USD. From a USDCAD pair standpoint, the US dollar fell around 1.5% towards 1.3630 -the lowest level of the day so far. Furthermore, a weak US dollar against G10 currencies helped the Canadian dollar.

The US dollar is trading lower today as US stocks rally. The S&P 500 and Nasdaq 100 are up by 3% and 2.6% at the time of this writing. There was bad news from the US Institute for Supply Management’s gauge of factory activity, which missed estimates, pushed the US dollar lower, and helped riskier currencies to increase (such as NZD, AUD and CAD, which are rising by 2%, 1.7% and 1.4% respectively).

Key Movers

The RBA is expected to raise its cash rate by 50bps at its meeting this afternoon, which would take the RBA rate to 2.85%. Market participants will be focused on how the RBA manages expectations because Governor Lowe has previously referred to the probability of slowing down rate hikes towards increments of 25 bps.

UK Prime Minister Truss changed her mind about her proposed tax cut. Market participants are betting it will take a more considerable UK government policy U-turn to restore credibility with markets. The Pound kept bouncing against the USD again today, hitting 1.1335 vs the USD in the North American trading session.

Expected Ranges

  • EUR/CAD: 1.3371 - 1.3525 ▼
  • GBP/CAD: 1.5274 - 1.5475 ▲
  • AUD/CAD: 0.8845 - 0.8891 ▲
  • USD/CAD: 1.3624 - 1.3802 ▼