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USD/CAD Exchange Rate Prediction – The Dollar Trends Higher Following PMI Report

By:
David Becker
Updated: Dec 1, 2021, 19:44 UTC

ISM manufacturing rises more than expected

USD/CAD Exchange Rate Prediction – The Dollar Trends Higher Following PMI Report

The dollar continued to trend higher versus the Loonie following a more robust than expected ADP Private payroll report. Powell and Yellen were both on the hill for their second day of testimony.  Yields were mixed, which flattened the curve. The Institute for Supply Management reported that its index of national factory activity increased to a reading of 61.1 last month from 60.8 in October.

Technical analysis

The dollar broke out closing above resistance which is now support at 1.28. Target resistance is seen near the September highs at 1.29.  The 10-day moving average cross above the 50-day moving average, which means that a short-term uptrend is almost in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The exchange rate is overbought with the fast stochastic printing a reading of 95, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index is generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Manufacturing Rises More than Expected

The ISM survey’s measure of supplier deliveries slipped to a reading of 72.2 from 75.6 in October. This reading follows the better than expected aggregate manufacturing number at 61.1 compared to the expectation of 61. The long delivery times kept inflation at the factory gate bubbling. The survey’s measure of prices paid by manufacturers fell to a still-high 82.4 from a reading of 85.7 in October.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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