USD/CAD bounces on upbeat US Industrial Production
**iNVEZZ.com, Monday 17 March:**
Statistics Canada today reported that foreign securities purchases increased by a seasonally-adjusted C$1.09 billion in January, falling well short of forecasts for C$3.24 billion. Overseas investors sold C$4.28 billion worth of Canadian securities in December.
The Canadian Existing Home Sales index grew by 0.3 percent m/m in February, stabilizing after January’s 3.3 percent drop.
In the run-up to the releases, the USD/CAD dropped to a four-day low at 1.1044 but so far today the loonie’s uptick against the greenback hasn’t been sustained, backing off as the day’s US economic data started flowing.
US Industrial Production for February has checked in today at 0.6 percent m/m, comfortably beating the market consensus for growth of just 0.2 percent. The figure for the prior month was also higher on revision, up from -0.3 to -0.2 percent.
After the better-than-expected US industrial production reading, Deutsche Bank chief US economist Joseph LaVorgna said that Q1 real GDP could surprise the market to the upside and that the bank is staying with its forecasts of 3.1% q/q.
The Empire State Manufacturing Index for March has come out at 5.6, well short of expectations for improvement from February’s 4.5 to 6.6. DB’s LaVorgna thinks though that traders should take the reading with a grain of salt, given that the gauge’s correlation to the all-important ISM index has been just over 0.28 over the past three years.
Marc Chandler, head of currency strategy at Brown Brothers Harriman, sees the USD/CAD carving out a “wedge or triangle pattern” with support near 1.096, but adds that technical signals are not strong.
Traders in the loonie continued to cover short positions in the week to 11 March, according to the Commodities Futures Trading Commission’s Commitment of Traders report released on Friday.
The $0.8 billion narrowing in the net short CAD position to $4.7billion was likely driven by the unchanged tone of the Bank of Canada at its monetary policy meeting in March.
Right now, the USD/CAD is trading at around 1.108, down 0.22 percent intraday.