Canadian Dollar Soft, Fails to Get Support from Positive Fundamentals

The Canadian dollar was one of the weakest currencies on Monday, falling against the majority of its most-traded peers, though not all of them. It was surprising to see such a poor performance considering that fundamentals were largely supportive of the currency.
The headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index fell to 54.4 in January from 57.9 in December. Being above the 50.0 level of no change, the indicator showed that, despite the drop, the “reading signalled a solid expansion in business conditions in the Canadian goods-producing sector”. The report commented on the result:

January data pointed to a solid expansion in overall operating conditions in the Canadian manufacturing sector. Growth moderated from that seen in December, however, as restrictions linked to the coronavirus pandemic 2019 (COVID-19) persisted. Growth in jobs and purchasing both softened at the start of the year while stocks of both inputs and finished goods were depleted. At the same time, border restrictions and port congestion led to longer input delivery times and a rise in backlogs. Nevertheless, firms remained optimistic that output in the year ahead will improve, although the longer-term impact of COVID-19 weighed slightly on the degree of optimism.

Another factor positive for the loonie was the rally of crude oil prices. Crude rallied more than 2% on Monday due to various reasons. Usually, the Canadian currency follows moves of crude oil because crude is Canada’s biggest source of export revenue. But the Canadian dollar failed to profit from the oil’s rally today.
USD/CAD traded at about 1.2847 as of 23:05 GMT today after rising from 1.2784 to 1.2852 during Monday’s trading. EUR/CAD was at 1.5497 after falling from 1.5506 to 1.5490. NZD/CAD traded at 0.9197 following the rally from 0.9147 to 0.9192.
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Original from: www.earnforex.com