DailyFX.com -
- Canada’s Ivey Purchasing Manager Index to Increase for First Time Since January.
- Will the Bank of Canada (BoC) Move Away From Its Easing Cycle?
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Trading the News: Canada Ivey Purchasing Manager Index (PMI)
A rebound in Canada’s Ivey Purchasing Manager Index (PMI) may boost the appeal of the loonie and spark a near-term pullback in USD/CAD as highlights an improved outlook for the Canadian economy.
What’s Expected:
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Why Is This Event Important:
A meaningful pickup in business spending may prompt BoC Governor Stephen Poloz to adopt a hawkish tone for monetary policy, and the central bank may show a greater willingness to move away from its easing cycle following the ‘insurance’ rate-cuts from 2015.
Expectations: Bullish Argument/Scenario
| Release | Expected | Actual |
| Gross Domestic Product (YoY) (JAN) | 1.1% | 1.5% |
| Industrial Product Price (MoM) (FEB) | -0.2% | -1.1% |
| Retail Sales (MoM) (JAN) | 0.6% | 2.1% |
Signs of a stronger-than-expected recovery accompanied by easing factory-gate prices may encourage Canadian firms to spending, and a positive development may generate a bullish reaction in the loonie as market participants scale back bets for additional monetary support.
Risk: Bearish Argument/Scenario
| Release | Expected | Actual |
| International Merchandise Trade (FEB) | -0.90B | -1.91B |
| Business Outlook Future Sales (1Q) | -- | 16.00 |
| CFIB Business Barometer (MAR) | -- | 52.3 |
However, subdued confidence paired with the slowdown in global trade may drag on private-sector activity, and a dismal PMI print may spur a further advance in USD/CAD as it fuels speculation for lower borrowing-costs.
How To Trade This Event Risk(Video)
Bullish CAD Trade: Ivey PMI Advances to
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Need to see red, five-minute candle following the release to consider a short trade on USD/CAD.
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If market reaction favors a bullish loonie trade, sell USD/CAD with two separate position.
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Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
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Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bearish CAD Trade: Headline, Core CPI Miss Market Expectations
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Need green, five-minute candle to favor a long USD/CAD trade.
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Implement same setup as the bullish Canadian dollar trade, just in reverse.
Potential Price Targets For The Release
USD/CAD Daily
Chart - Created Using FXCM Marketscope 2.0
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The downward trend from earlier this year may largely unwind in the days ahead amid the failed attempts to close below 1.2930 (61.8% expansion) to 1.2980 (61.8% retracement), while a bullish divergence appears to be taking shape in the Relative Strength Index (RSI).
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Interim Resistance: 1.3560 (100% expansion) to 1.3630 (38.2% retracement)
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Interim Support: 1.2800 (38.2% expansion) to 1.2831 (October low)