USD/CAD Exchange Rate Prediction – The USD/CAD Rallies on Manufacturing Survey Miss
The USD/CAD moved higher on Monday after closing the week lower. Weaker than expected U.S. ISM Manufacturing data weighed on U.S. yields, which generated headwinds for the greenback. Faster than expected inflation data released in the U.S. at the end of last week, seemed to buoy the dollar. Prices paid by manufacturers declined in the latest week which means that inflation in the U.S. could actually be easing.
The USD/CAD rallied for a second consecutive trading session. Support is seen near the 100-day moving average at 1.2365. Resistance on the currency pair is seen near the 10-day moving average at 1.2529. The exchange has rebounded from oversold territory and has generated a crossover sell signal. This is reflected by the crossover by the fast stochastic. The current reading on the fast stochastic is 22 up from 5. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line.
Prices Ease Slightly
According to a report on Monday by the Institute of Supply Management (ISM), manufacturing activity declined in July. The 59.5 ISM manufacturing survey in July was down from the 60.6 reading in June. Expectations were for the manufacturing index to come in at 60.9. Forward-looking new orders slipped to a reading of 64.9 last month from 66.0 in June. There was some encouraging news on inflation. The ISM survey’s measure of prices paid by manufacturers fell to a reading of 85.7 last month from a record 92.1 in June.