GBPUSD continues to rise despite the strength of the US dollar
GBPUSD continued to achieve gains in the morning trading on Tuesday in the European market…
On Monday, at GMT 2:00 p.m., the Institute for Supply Management released its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.
Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, forex brokers can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.
Last month, the ISM manufacturing PMI for the United States came out at 52.6. The forecast for this month was at 53.6. However, the actual figure reading came out slightly better, at 54.2.
On Tuesday, at GMT 1:30 p.m., the Markit released Canada’s manufacturing purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 400 purchasing managers in the country.
Businesses are the first to react to changing economic climate. The manufacturing PMI is calculated based on survey questions covering employment, production, price levels, new orders situation. Also, it is based on inventory conditions. Hence, CFD traders consider this data to be a leading indicator of the overall economic health of the country.
Last month, Canada’s manufacturing PMI reading came out at 47.8. This month, it went above the 50 thresholds and came out at 52.9.
The USD/CAD remain in a sustained downtrend since March 2020. Over the last few months, it fell by around 1,350 pips. However, after reaching the 1.3350 level, it found a strong support in June. Last week, the USD/CAD tested the support near 1.3350 level once again but failed to close below it. It got rejected near the downtrend line yesterday. Currently, it is once again testing this support near the 1.3350 level.
The US ISM Manufacturing PMI improved a bit. However, the Canadian Manufacturing PMI came out at 52.9 against a forecast of 47.8. It indicated a much strong recovery in the Canadian economy compared to the US. We believe it would set a bearish fundamental outlook for the USD/CAD this week. Therefore, if the USD/CAD closes below the support near 1.3350, it would likely attract additional bearish momentum in the market.
Hence, US Forex and CFD traders should look out for trading opportunities below this major support level around 1.3350.
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at email@example.com
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