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Canadian Data and USD/CAD Reactions (7/7)

Today we first got Canadian Building Permits data for May, which grew at a surprisingly strong 13.8%. The forecast was around 3.1%, and the April reading was 2.2%, revised up from 1.1%.

After hour 30 later, the Ivey PMI for June came out, and disappointed forecast that business conditions are back in expansion mode. The reading for June was 46.9, which missed forecast of 51.3. The previous reading was 48.2, and this shows 2 consecutive months of declining economic conditions. 

USD/CAD 1H chart, 7/7

(usdcad 1h chart)

The  USD/CAD reacted to the building permits with strength, pushing below a consolidation pattern. However, before being able to push to new lows, the Ivey PMI weakened the loonie, and the USD/CAD rallied sharply, and is poised to test lat week's highs in the 1.0680-1.0696 area.

A break above 1.07 can form a bottom and signal a period of consolidation against the sharp decline we have seen since USD/CAD started retreating from a fresh 2014-high at 1.1278. 

Before that breakout, we still have to respect the bearish trend that is already in place, so watch out for sellers if price stalls at 1.0695 especially the 1H RSI reading also gives us a bearish divergence.