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Year-High IVEY PMI Gives the Loonie a Boost

In September, Canadian businesses reported a rate of expansion that was the fastest in a year. The IVEY PMI came in at 58.6, the highest since Oct. 2013. The August reading was 50.9, and forecasts called for a print around 53.4. The positive surprise gave the CAD a boost. The USD/CAD on the back of general USD-weakness to start the week, and the strong IVEY PMI data.


(click to enlarge; source: forexfactory.com)

However, we should note that the IVEY PMI data is not a game changer. First of all, the readings since 2011 have been slightly trending down, and September's data is too lonely to show a reversal to this trend. Also, this data has very limited implications for monetary policy. Furthermore, the USD has been strong and Friday's positive jobs data should continue to support the USD. The market has not shown otherwise, so the trend should continue to favor the USD/CAD bullish mode.

(USD/CAD 4H Chart 10/6)

If the trend is indeed still bullish, we should see buyers when price gets in the 1.11-1.1130 area. This area contains previous support and resistance pivots, as well as a rising trendline. Also, if the 4H RSI comes down to 40 and flattens, we should anticipate a bullish attempt. 

For the bullish scenario, we should still limit our bullish outlook first to the 1.1270 area because the 1.1278 level is the 2014-high and we might continue to see some sellers here in the short-term.