Home Daily Commentaries Canada’s manufacturing PMI rises, nearing expansion level

Canada’s manufacturing PMI rises, nearing expansion level

Daily Currency Update

Canada’s Manufacturing Purchasing Manager’s Index (PMI) which measures the performance of the manufacturing sector in Canada, rose from 48.8 to 49.6 in June. Despite being below 50, the threshold to indicate growth in this sector, this is a positive sign for the manufacturing sector in Canada. Canadians are anxiously awaiting the next Bank of Canada (BoC) interest rate decision in September, the BoC is still 50 basis points (bps) below the Federal Reserve which means there may still be hikes on the horizon.

Key Movers

The US Manufacturing Purchasing Manager’s Index (PMI), which measures the strength of the manufacturing sector was reported at 46.4, 0.4 higher than the previous month but still below the 50-level threshold which would indicate expansion. This is the ninth consecutive month with PMI reporting below the 50 level, indicating continued contraction. The US Job Openings and Labor Turnover Survey (JOLTS) reports 9.582 million job openings for June versus the expected 9.610 million. This is lower than the previous month’s revised reading of 9.610 million as well. While this is still a high reading historically speaking, this figure is relatively low for the year. As expected, most data from the US recently shows evidence that the economy is struggling to expand amid the higher interest rates imposed by the Federal Reserve.

The eurozone unemployment rate hit a record low of 6.4%. This signals a strong labour market despite weak economic growth in the region.

The Reserve Bank of Australia (RBA) has left rates unchanged at 4.1% for the second month in a row. Interest rates in Australia are currently at their highest level in 11 years while inflation is still at 6% in Q2, far above Australia’s target of 2-3%. There is likely still more room for the RBA to raise rates, however, the recent rate hold has weakened the AUD.

The UK Manufacturing PMI has dropped to 45.3, the lowest reading so far this year. The UK economy is continuing to struggle through higher interest rates.

Expected Ranges

  • EUR/CAD: 1.44932 - 1.45873 ▲
  • GBP/CAD: 1.69199 - 1.70112 ▲
  • AUD/CAD: 0.87769 - 0.88686 ▼
  • USD/CAD: 1.31792 - 1.32992 ▲