The Canadian Dollar to US Dollar (CAD/USD) exchange rate was trending in the region of 0.9154 yesterday, moving between a low of 0.9137 and a high of 0.9169. Movement was consistent with the day’s opening figures despite increased demand for the US Dollar.
Yesterday the Canadian Purchasing Managers Index revealed a better-than-forecast result. With a previous posting of 46.9 the forecast figure was 53.0. The actual data for July was revealed to be 54.1. The Employment Index for July was 49.1, the Inventories Index was 47.3, the Supplier Deliveries Index was 45.7 and the Prices Index was 55.2.
The USD continued to surge yesterday following an impressive Jobless Claims statistic. With a previous posted figure of 303,000 economists forecast an increase to 304,000. Traders were pleasantly surprised to see a dramatic decrease to 289,000. This unexpected dip is likely to be connected to the recent retooling undertaken by manufacturers in preparation for new production.
Later today we will see the release of very influential reports concerning the Canadian Net Change in Employment and the Unemployment Rate. The Net Change in Employment posted a previous figure of -9.4, 000 and is forecast to rise significantly to 24,000. Increases in employment are generally accompanied by higher consumption and expenditure levels.
At the same time, higher employment, consumption and expenditures may lead to heightened inflationary pressures that encourage central banks to tighten monetary policy. Should the central bank of Canada respond to this by raising interest rates it may bolster the ‘Loonie’. The Unemployment Rate will also play a significant role in the strength of the Canadian Dollar. Having posted a previous figure of 7.1% economists forecast no change. The Unemployment Rate is one of the most observed headline indicators of Canada’s labour market and so has a huge impact on the nation’s economic outlook.
Canadian Dollar to US Dollar (CAD/USD) Exchange Rate Forecast
Next week will see some important US data released. The Monthly Budget Statement is likely to affect changes, and is currently forecast at -95 billion. Advance Retail Sales for July is one to watch. The figure is a significant market mover, valuable both for its timeliness and insight into consumer demand and consumer confidence. With a previous post of 0.2% economists have forecast an increase of 0.3%.
Canadian data releases next week are also likely to have an impact on the Canadian Dollar to US Dollar (CAD/USD) exchange rate. The Housing Starts report is one to watch out for. The data posted a previous figure of 198,200 and there is no forecast figure at present. Economists use this figure as a leading indicator for the economy as a whole due to Housing Starts’ sensitivity to changes in the business cycle.
Although the ‘Loonie’ could be supported by upbeat domestic data, if US fundamentals continue to impress, the Canadian Dollar to US Dollar (CAD/USD) exchange rate is forecast to trend lower next week.
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