Loonie benefits from buoyant domestic data
2024-03-08
Summary:
The Canadian dollar steadied at a 2-week high vs. USD on Friday. Domestic data: trade balance surplus in January, business activity rebounds.
The Canadian dollar steadied at a two-week high against its US counterpart on Friday as domestic data showed its trade balance swinging into surplus in January and business activity recovering.
Canada recorded a bigger-than-expected trade surplus of C$496 million after a revised C$863 million deficit in December, but a decline in both export and import volumes barely impressed economists.
The S&P Global Canada Manufacturing PMI rose to a seasonally adjusted 49.7 last month, posting its highest level since April, while Service PMI notched its highest level since October though remaining in contraction.
The BOC said on Wednesday it was too early to consider easing rates as it kept its benchmark rate on hold at 5%, which contrasts sharply with expected loosening indicated by Fed Chair Powell.
Loonie was also pushed higher by rising oil prices. Keystone oil pipeline resumed service after going offline and temporarily restricting a major conduit of Canadian oil to its neighbour to the south.
The EIA said the global oil market is relatively well supplied with demand growth slowing and supply increasing from the Americas. Oil inventories in the US rose for a 6th straight week.
The pair dipped below its 50 SMA and ascending channel, suggesting more pains ahead. A break below key support around 1.3340 could threaten downward trajectory towards 1.3200.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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