Usd/cad rises slightly amid economic improvements in both Canada and the U.S.

USDCAD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.02%	3 Pips
Week to-date	-0.87%	-126 Pips
March	-0.87%	-126 Pips

Upcoming key events (London Time)

Fri 01:30 PM CAD Labour Force Net Change in Employment
Fri 01:30 PM USD Nonfarm Payroll Employment
Fri 01:30 PM USD Average Hourly Earnings (12-mth)
Fri 05:30 PM USD Federal Reserve Chair Jerome Powell speech

What happened lately

In Canada, the Ivey Purchasing Managers Index (PMI), a key indicator of economic health in the manufacturing sector, showed significant improvement in February. The index rose to 55.3, up from 47.1 in January after seasonal adjustments. This change reflects an expansion in business activity and suggests stronger economic performance for Canada, contrasting with the previous month’s contraction figure of 46.2. The rise in the PMI indicates growing confidence among purchasing managers and could be indicative of increased demand for goods and services in the Canadian economy. The positive shift in index data suggests that Canada’s economy may be gaining momentum, possibly due to improved industrial activities or increased consumer demand.

In the United States, the economic data also points to a generally positive outlook. Nonfarm Business Labor Productivity grew to 1.5% in the fourth quarter, up from 1.2% in the third quarter. This indicates that U.S. businesses are becoming more efficient, producing more output per hour worked. Alongside this, Unit Labor Costs decreased from 3% to 2.2%, suggesting that the cost of labor is rising at a slower pace, which can be favorable for corporate profit margins. Additionally, initial claims for unemployment insurance fell to 221,000 from a previous 242,000, pointing to a strong labor market. U.S. new orders for manufactured goods also saw an increase of 1.7% in January, a turnaround from a revised decrease of 0.6% in December, signaling a positive trend in the manufacturing sector that might translate to economic growth.

The recent data is likely to impact the USDCAD currency pair. Canada’s enhanced PMI figures could strengthen the Canadian dollar as they suggest economic resilience and growth. Meanwhile, the U.S. improvements in productivity, declining labor costs, robust labor market, and rising manufacturing orders all support the U.S. dollar. However, as both countries show signs of economic strength, the USDCAD pair may remain in a state of consolidation, awaiting further significant data, such as the upcoming labor force change in Canada and nonfarm payroll employment in the U.S. Particularly, the Federal Reserve Chair Jerome Powell’s speech may provide further insights into future monetary policy, influencing traders’ expectations and potentially affecting the currency pair in subsequent sessions.

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What can we expect from USDCAD today?

USDCAD on Thursday rose 0.02% to 1.43390. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.43255 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.43536 or trades above daily pivot 1.43395. Break above could target R1 at 1.43531. While to the downside, we are looking at 1.43255 (S1) and daily low of 1.43260 as support levels. USDCAD need to break on either side to indicate a short-term bias. A break above 1.43536 may suggest continuation after recent positive movement.

For the week to-date, take note that USDCAD is mixed as compared to the prior week.

Key levels to watch out:

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