CAD: Manufacturing Sales are Forecast to Have Fallen - TDS
CAD: Manufacturing Sales are Forecast to Have Fallen - TDS
Research Team at TDS, suggests that after two months of very robust
gains, manufacturing sales are forecast to have fallen by 1.8% in
February.
Key Quotes
“A disappointing
print would mirror the performance of February exports and is expected
to be driven by several sectors that are poised for a retrenchment. Of
note, the transportation sector is likely to return to earth as auto
production normalizes and a stronger CAD dents aerospace production
priced in USD.
Shifting the focus to the volumes metric, an
observed fall in industrial prices is likely to translate to a less
severe drop in manufacturing volumes. However, some retrenchment in
activity can be expected in the month of February given the outsized
0.6% monthly increase observed for January industry-level real GDP.
USD/CAD
marked a new low this week for the year, pushing below 1.28 for the
first time since mid-2015. We think the decline in USDCAD is starting to
lose steam given 1) over-extend positioning and technical indicators
and 2) possible growth slowdown at the start of Q2. A weaker
manufacturing print would likely support a squeeze in USDCAD, leading to
a covering of short USD positions.
Indeed, our read of
positioning data shows that CAD longs have reached 80% of the three-year
max, which is consistent with turning points in market sentiment. In
turn, a peak in Canadian data surprises and the start of more balanced
growth numbers could support a recovery in USDCAD. For an upside break,
the key level to watch is 1.30, which opens up a test of 1.320.”
(Market News Provided by FXstreet)
