The US Dollar (USD) fell against the Canadian Dollar (USD) on Tuesday, decreasing the price of USD/CAD to less than 1.3400 ahead of the Canada’s Ivey Purchasing Managers Index (PMI) news release. The technical bias remains bullish because of a higher high in the recent upside move.
As of this writing, the pair is being traded around 1.3394. A support may be seen near 1.3282, the 50% fib level support area as demonstrated in the given below daily chart. A break and daily closing below the 1.3282 support shall incite renewed selling interest, validating a move towards the 1.3067 support zone which is another critical support zone.
On the upside, the pair is expected to face a hurdle near 1.3429, the trendline resistance area as marked with brown color in the above chart. A break and daily closing above the 1.3429 resistance shall trigger fresh buying pressure, opening door for a move towards the 1.3600 resistance, the high of 28th December, 2016 as marked with red color in our chart. The technical bias shall remain bearish as long as the 1.3600 resistance zone is intact.
Canada’s Ivey PMI News
The Ivey PMI released by the Richard Ivey School of Business captures business conditions in Canada. The Ivey PMI is an important indicator of business conditions and the overall economic condition in Canada. The data is scheduled for release today during the New York trading session. According to the average forecast of different economists, the PMI registered a reading of 58.9 points in February as compared to 57.2 points in the month before.
A result above 50 points is seen positive, or bullish for the CAD, whereas a result below 50 is seen as negative, or bearish.
How USD/CAD Reacted to Ivey PMI Releases in Past?
USD/CAD inched higher by 35 pips on January 6th, 2017 after the release of Ivey PMI data. The Ivey’s PMI dipped to less than 49.5 points in December, showing a major decline in the Canada’s business optimism.
The pair however declined by 45 pips on 6th December, 2016 after the Ivey PMI data. The PMI had improved to 56.5 points in November, indicating a major gain in the business optimism.
How to Trade today’s Ivey’s PMI Data?
Today if the Ivey’s PMI data comes better than forecast, then buying put options in USD/CAD near the 1.3400 resistance area can be a good strategy.
Alternatively, if the actual figure comes worse than forecast, then buying call options around the 1.3430 level can be a good strategy.