The Canadian dollar has looked sharp, with gains of 1.0% since Friday. Will the positive momentum continue on Tuesday? Currently, the pair is trading at 1.3316, up 0.07% on the day. On the release front, there are no Canadian events. In the U.S., core durable goods orders is expected to improve to 0.3%, while durable goods orders is forecast to plunge 1.1%. On Wednesday, the U.S. publishes ISM Non-Manufacturing PMI and ADP nonfarm payrolls.
The Canadian dollar ended last week with strong gains, as Canada’s GDP posted a gain of 0.3% in January. This beat the estimate and came after two successive declines, which has raised concerns about the health of the Canadian economy. The slowdown in the fourth quarter has forced the BoC to turn more dovish and shelve any plans of hiking interest rates. There have even been calls for a rate cut from the bank, but the GDP gain in January will lessen the pressure on the BoC to stimulate the economy.
Positive data out of China this week has also boosted the fortunes of the Canadian dollar. Investor risk appetite has risen following a key manufacturing report that was better than expected. Chinese Caixin Manufacturing PMI improved to 50.8, easily beating the estimate of 50.1 points. Investors cheered as the indicator climbed to an 8-month high, after three successive readings in contraction territory. The Chinese economy has been hit hard by the trade war with the U.S., and a piece of good news sparked strong gains on the equity markets and boosted the Canadian dollar.