The Canadian Dollar (CAD) advanced against the softened Pound (GBP) on Monday after the latest Ivey PMI report showed increased to its best level in a year in September.
Comments made over the weekend by business secretary Vince Cable combined with last week’s disappointing Manufacturing and Services PMI reports to weigh upon the Pound on Monday.
Mr Cable said that the Pound is overvalued by as much as 10 to 15%, his comments add to those of Deputy Bank of England Governor Ben Broadbent.
With a lack of UK, economic data releases on Monday the Pound softened as traders favoured other currencies.
The Canadian Dollar advanced after the latest Ivey Purchasing Managers Index smashed forecasts and showed that purchasing activity in September increased to its highest level in a year.
The data measures changes to economic activity as indicated by a panel of purchasing managers from across Canada.
The seasonally adjusted index increased to a reading of 58.6 from 50.9 in August, beating forecasts for a figure of 53.0.
A reading above 50 indicates an increase in the pace of activity. The unadjusted index jumped to 65.2 from 49.1.
Almost all of the index’s main components strengthened. The employment gauge rose to 53 from 49.5, while inventories also pulled out of contraction territory, climbing to 60 from 46.8. Prices shot up to their highest level since March, rising to 71.6 from 52.2.
Against the Euro, the Canadian currency was trading close to its best level in four days. The single currency fell after German industrial orders fell sharply by the biggest amount since the height of the global financial crisis in 2009.
Orders fell by 5.7% on a month on month basis, far worse than the 2.5% drop forecast by economists.
The positive Ivey PMI goes some way to countering the negative effects of last Friday’s trade data, which showed that Canada made an unexpected trade deficit in August and should negate some of the concerns over the nation’s economic growth for the third quarter.
Canadian Dollar to Pound Sterling (GBP/CAD) Exchange Rate Forecast
Sterling could regain some lost ground on Tuesday if the latest Manufacturing and Industrial Production data comes in positively and reduces some of the concerns that the UK economy is slowing down.
A strong figure will likely cause investors to once again raise their bets for the BoE to raise interest rates next year.
Negative reports however will likely weaken the currency firmer as it will be seen as an affirmation of Broadbent’s comments.
Data out of Canada will be for Augusts Building Permits. Economists are expecting a decline of -8% from the preceding month’s figure of an 11.8% increase.
Canadian Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Canadian Dollar,
,Pound Sterling,0.5584 ,
Canadian Dollar,,US Dollar,0.8939 ,
Canadian Dollar,,Euro,0.7112 ,
Canadian Dollar,,Australian Dollar,1.0239,
Canadian Dollar,,New Zealand Dollar,1.1470 ,
US Dollar,,Canadian Dollar,1.1178 ,
Pound Sterling,,Canadian Dollar,1.7906 ,
Euro,,Canadian Dollar,1.4061 ,
Australian Dollar,,Canadian Dollar,0.9765 ,
New Zealand Dollar,,Canadian Dollar,0.8702 ,
[/table]
