The US Dollar Canadian Dollar (USD CAD) exchange rate failed to push higher this afternoon as the US manufacturing sector slowed at a faster pace than expected this month.
The ‘Greenback’ softened as the Philadelphia Fed Manufacturing Index plummeted from 32.8 to 22 in April, coming in lower than the drop to 25 that had been forecast by economists. The decline also followed the previous month’s drop from a 33-year high of 43.3.
US firms reported that business confidence continued to recede in recent months as the tax reforms and infrastructure spending increased promised by Donald Trump before his election have still yet to come to fruition.
However despite the drop analysts remained optimistic about the level of growth shown by the sector, with Michael Trebing, senior economic analyst at the Philadelphia Fed commenting;
‘They have come down from really high levels, but these are still very good, positive readings.’
Markets were also pleased by the accompanying report that suggested that over 50% of firms plan to increase their capital spending this year, up from 40% at the same point last year.
Meanwhile the Canadian Dollar has shown some resilience in trading today as oil prices managed to recoup some of their losses from yesterday, following better than expected US crude inventory figures.
Oil markets began to rally as Saudi Arabia and Kuwait hinted that the production cuts implemented by the Organization of the Petroleum Exporting Countries (OPEC) and Russia were likely to be extended for the remainder of 2017.
However with analysts remaining concerned over the possibility of falling US demand and further build up in global stockpiles, oils gains were largely negligible on Thursday, hindering the ‘Loonies’ chances of pushing higher against the weakened US Dollar.
Looking ahead the USD CAD exchange rate is likely to strengthen tomorrow following the release of the latest US Existing Home Sales figures, with sales expected to rise from 5.48m to 5.6m in March.
Meanwhile the Canadian Dollar is likely to retreat on Friday as economists forecast that Canada’s inflation rate fell from 2% to 1.8% last month, following the drop in fuel prices. Investors are likely to be particularly disappointed as it reduces the likelihood of the Bank of Canada (BOC) tightening its monetary policy in the foreseeable future.
Current Interbank Exchange Rates
At the time of writing the USD CAD exchange rate was trending around 1.34 and the CAD USD exchange rate was trending around 0.74.