Technical Bias: Neutral
- USDCAD declines more than 60 pips to trade in the low-1.26 region.
- US employers added fewer than 200,000 jobs in March for the first time since January 2014, according to ADP.
- US manufacturing sector reaches a 22-month low in March.
- Canada’s manufacturing sector contracts for second straight month in March, according to RBC.
The USDCAD declined on Wednesday and was trading in a familiar range, as the US dollar weakened across the board following disappointing economic data.
The USDCAD fell 0.5 percent to 1.2613 after touching a session low of 1.2599. The pair had broken the 1.27 plateau on Tuesday to reach a high of 1.2775. The next support target for the USDCAD is 1.2573. On the upside, initial resistance is likely found at 1.2764.
In economic data, payrolls processor ADP said on Wednesday that the US economy added only 189,000 nonfarm payrolls in March. That was the first time in more than a year job creation was below 200,000, suggesting the labour market was approaching full capacity.
The report came just two days ahead of the Labor Department’s official nonfarm payrolls data, which is expected to show the creation of more than 240,000 jobs last month.
In a separate report today the Institute for Supply Management said US manufacturing activity fell to a 22-month low in March. The ISM manufacturing PMI cooled to 51.5 in March from 52.9 in February, as new orders continued to moderate. In total, ten of the 18 manufacturing sectors reported expansion last month, ISM data showed.
In Canadian data, the RBC manufacturing PMI pointed to a second straight month of contraction for the country’s manufacturing sector. The RBC Canadian manufacturing PMI increased marginally to 48.9 in March from February’s record low of 48.7. It was the first back-to-back contraction in the survey’s history.
Said Craig Wright of RBC: “We remain confident that as the U.S. economy continues to strengthen and the Canadian dollar becomes more competitive, there will be an uptick in exports, a good sign for manufacturers – we need some time to see this materialize.”