USDCAD Pare Gains After Weak Philly Fed Manufacturing Index
USDCAD trades close to daily lows after weak economic data from the U.S. economy. The employment market in the USA faces a historical challenge after the U.S. initial jobless claims reported today at 2438K higher from the estimate of 2400K as the coronavirus crisis lockdown continues to impact the U.S. job market. The four-week average dipped from the previous 3616.5K to 3042K on May 15. The Continuing Jobless Claims came in at 25.073K above the expectations of 24.765K on May 8.
The Manufacturing Survey from Philadelphia Fed came in at -43.1, below the forecasts of 41.5 in May. The index hit a 40-year low the previous month. The percentage of firms reporting decreases this month (58%) far exceeded the percentage reporting increases (15%). The Philadelphia Fed index for new orders rose 45 points out of an all-time low, from -70.9 to -25.7. The current shipments index increased 44 points out of an all-time low in April, from -74.1 to -30.3. Unfilled orders held steady at -13.7, while delivery times fell 11 points to -6.7, showing shorter delivery times.
Manufacturing PMI at 39.8 Second Worse Reading On Record
United States Manufacturing PMI registered at 39.8 topping the expectations of 38 in May. The Services PMI came in at 36.9 above the expectations of 30, while the PMI Composite rose from previous 27 to 36.4 in May. The data implies that the rate of economic contraction seems to have peaked in April. Chris Williamson, Chief Business Economist at IHS Markit, said We anticipatethatGDP will decline at an annualised rate of around 37% in the second quarter…”
Canada ADP Employment Change declined to -226.7K
On the other side of the equation, in Canada, the ADP Employment Change declined to -226.7K in April from previous -177.3K. The Canadian New Housing Price Index came in at 0%, below the expectations of 0.1% in April, the yearly reading for the New Housing Price Index registered at 0.9%.
The USDCAD is 0.05% higher at 1.3907 close to daily lows as the dismal economic data weigh on the greenback. USD is weakening against the Canadian loonie amid strength in crude oil prices that continue the rebound from historically low levels. The technical picture remains bullish for the pair despite the recent correction. However, the break below the 50-day moving average gives the bears the upper hand for the short term and might push USDCAD lower to 1.37 area.
On the upside, the first resistance for USDCAD stands at 1.3946 the daily top. If the pair breaks higher, the next hurdle will be met at 1.3971 the high from May 19. In case the bullish momentum persists, the next resistance stands at 1.4081 the 50-day moving average.
On the other side, immediate support for USDCAD stands at 1.3891 the daily low (higher low). If the pair breaks below 1.3891, the next support will be met at 1.3848 the low from April 30. The next target for bears is at 1.3667 the 100-day moving average.