Canada’s Ivey PMI Jumps To 60.1, USD/CAD Settles Above 1.3450

Key Insights

• Ivey PMI grew from 49.3 in December to 60.1 in January. 
• The report showed that purchases exceeded last month’s levels. 
• USD/CAD settled above the 1.3450 level as traders focused on the general strength of the U.S. dollar.

Ivey PMI Exceeds Expectations

On February 6, Canada reported that Ivey PMI increased from 49.3 (revised from 33.4) to 60.1, compared to analyst consensus of 42.3. Numbers above 50 show expansion.

This is an extremely surprising report as the actual numbers have significantly exceeded analyst estimates. The revision of December 2022 data was also a big surprise.

The notes to the Ivey Purchasing Managers Index stated the following: “[…] there was error in the seasonal adjustment calculations for the period of November 2020 to December 2022, where the multiplicative inverse of the seasonal adjustment factors was used. The historical data was revised on February 6, 2023 […]”

USD/CAD Keeps Moving Higher After The Release Of Ivey PMI Report

USD/CAD  settled above the 1.3450 level after the release of Ivey PMI data. USD/CAD is moving higher as the U.S. dollar gained strong upside momentum against a broad basket of currencies.

In its recent interest rate decision, the Bank of Canada noted that it expected to hold the policy rate at the current level if the economic developments evolved in line with its outlook. Meanwhile, the Fed is expected to raise rates by at least 25 bps, and some traders believe that the Fed may be forced to make two 25 bps hikes at the upcoming meetings in order to fight inflation.

The difference between the current Fed policy and BoC policy is bearish for the Canadian dollar. At this point, it remains to be seen whether strong Ivey PMI data will be able to provide material support to the Canadian dollar as traders stay focused on the general direction of the American currency.

For a look at all of today’s economic events, check out our economic calendar.