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Canadian Dollar Falls on Disappointing Exports, Lower PMI

November 6, 2019 at 20:44 by Andrew Moran

All the Canadian dollar bills denominationsThe Canadian dollar is falling against multiple major currency rivals midweek, caused by disappointing trade numbers and a lower purchasing managers’ index (PMI) reading. The loonie, which has been one of the best-performing currencies in international markets, continues to lose its momentum as the year winds down.

On Wednesday, the October Ivey PMI reading came in at 48.2, down from 48.7 in September – anything below 50 indicates a contraction. This is way under the median estimate of 54.4 and is at the lowest level since March 2015. The index declined on slumping inventories (45.6), employment (47.2), and supplier deliveries (45.1). Prices also jumped from 56.9 in September to 57 last month.

According to Statistics Canada, the trade deficit slid to $980 million in September, down from an upward revised $1.24 billion in August. Imports dropped by 1.7%, while exports tumbled 1.3%. The biggest story from the report was the decrease in crude oil and gold shipments.

This comes one week after it was reported that the gross domestic product edged up 0.1% in August, falling short of the market forecast of 0.2%. The positive aspect of the numbers was that 14 out of 20 industrial sectors recorded gains. But could anemic growth turn into a contraction?

new economic report from accounting firm RSM Canada projects that GDP growth could stall next year as a result of a global manufacturing recession. The report stated:

So when U.S. manufacturing business sneezes, Canada catches a cold; and when Lehman Brothers collapsed in New York, Toronto was caught in the maelstrom, along with every other financial centre in the world. This seems obvious from the parallel movement of U.S. and Canada’s business sentiment, and of the similar returns on equity investments in each economy.

But Canadians do not have much hope anyway, suggests a new survey. A Nanos Research/Bloomberg News poll found that just 22% showed strong confidence in Prime Minister Justin Trudeau’s economic plan. The study discovered that 30% have no confidence and 47% are in between.

The USD/CAD currency pair rose 0.2% to 1.3182, from an opening of 1.3157, at 19:37 GMT on Wednesday. The EUR/CAD advanced 0.16% to 1.4591, from an opening of 1.4569.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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