USD/CAD Bulls Likely Keep Control Despite Slight Drop in ISM Manufacturing PMI in the USA
Last Updated on February 1, 2021
USD/CAD Outlook: 1st February 2021
Canada – Manufacturing PMI
On Monday, at GMT 2:30 p.m., the Markit will release Canada’s manufacturing purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 400 purchasing managers in the country.
Businesses are the first to react to changing economic climate. The manufacturing PMI happens to be based on survey questions covering employment, production, price levels, new orders situation. Also, it is based on inventory conditions. Hence, some top rated forex brokers consider this data to be a leading indicator of the overall economic health of the country.
Last month, Canada’s manufacturing PMI reading came out at 57.9. If it remains above the 50 levels, it will likely strengthen the value of the Canadian Dollar against other currencies.
United States – Institute for Supply Management (ISM) Manufacturing PMI
Later, at GMT 3:00 p.m., the Institute for Supply Management released its manufacturing PMI figure for the United States. ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.
Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, CFD traders can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.
Last month, the ISM manufacturing PMI for the United States came out at 60.7. The forecast for this month is currently set at 60.0.
On January 22, 2021, the USD/CAD broke above the downtrend line. Over the last week, it appreciated by around 150 pips. Last Friday, the USD/CAD started a retracment. It formed a large bearish bar. the MACD is still showing a strong bullish signal on the daily timeframe. Currently, it is trading just below the major resistance near 1.2900.
The US ISM Manufacturing PMI went down slightly from 60.7 to 60.0 over the last month. On the other hand, the Canadian Manufacturing PMI came out at 57.9 last month and likely remain above 50. We believe it would set a bearish fundamental outlook for the USD/CAD this week. However, given the bullish momentum and the slight decline in US ISM Manufacturing PMI, there is a good chance that the USD/CAD will remain bullish from a technical perspective. Therefore, if the USD/CAD closes above the resistance near 1.2900, it would likely attract additional bullish momentum in the market.
Hence, CFD traders should look out for trading opportunities above this major resistance level around 1.2900.
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