Loonie Pares Decline As Ivey PMI Hits Nine-Month High In January

By Tzu-Wen Chen,

THETAKEAWAY : [ Canada’s Ivey PMIhits nine-month high in January] > [Purchasing activityimproves, led by better labor market, deliveries and risingprices] > [ CAD paresearlier losses vs. USD ]

Canada’s Ivey Purchasing Managers Index (PMI) exceeded forecasts as it unexpectedly climbed to a nine-month high in January, indicating an accelerating rate of purchasing activity in the Canadian economy. The headline Ivey PMI, a leading indicator used to measure business optimism and forecast economic growth, registered 66.5 on a seasonally adjusted basis in February, rising from 64.1 in January. According to a Bloomberg News survey, economists had forecast a reading of 62.0. Readings over 50 signify expansion while values under 50 indicate contraction.

According to a report released jointly by the Purchasing Management Association of Canada and the Richard Ivey School of Business, the Ivey Employment Index rose to 58.8 from 55.2 and the Supplier Deliveries Index climbed to 48.8 from 41.9, indicating improvements in the labor market and deliveries from the previous month. The Price Index jumped to 73.1 from 65.0, due largely to expansions in Canada’s manufacturing and export industries as the U.S. economic recovery gathers pace. Furthermore, price pressures continued to rise as a result of persistent strength of the Canadian dollar. In contrast, inventories continued to trend lower, dropping to 54.9 from 57.0 in the previous month.

USDCAD1-minute Chart: March 6, 2012

Chart createdusing Strategy Trader – Prepared byTzu-Wen Chen

In the minutes afterthe data release, the loonie strengthened againstthe greenback, gaining 13 pips before retracing slightly. Tradingof the Canadian dollar was mixed in early North American tradingtoday, as it strengthened against high-yielding currencies(Australian dollar and New Zealand dollar), but weakened againstsafe-haven currencies such as the U.S. dollar and Japanese yen,amid growing concerns of a slowdown in global growth and renewedeuro-area worries two day before a critical deadline in the Greekdebt crisis. At the time of this report, the loonie had pared someof its earlier losses and the USDEUR pair was trading around$1.0005.

--- Written by Tzu-Wen Chen DailyFX Research
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/03/06/Loonie_Pares_Decline_as_Ivey_PMI_Hits_Nine-Month_High_in_January_.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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