The U.S. dollar tumbled against the Canadian dollar on Tuesday after official data showed that Canadian manufacturing sales rose to a record high in July. The Canadian dollar strengthened after Statistics Canada reported that manufacturing sales rose 2.5% to C$53.7 billion in July, outstripping the previous record of C$53.2 billion set in July 2008. Economists had forecast an increase of 1.0%. The strong increase was mainly due to higher sales in the transportation equipment and primary-metals industries the statistics agency said. Transportation-equipment sales rose 10.3% to C$10.1 billion in July, while primary-metal sales rose 4.0% to C$4.2 billion. The agency said manufacturing sales have been trending upwards since January. July sales were up 16 of 21 industries, representing approximately 56% of the country’s manufacturing.
Meanwhile, in the U.S economy, data showed that producer price index slightly worsened from 0.1% to 0.0% in August. The greenback’s losses looked likely to be held in check amid heightened expectations for an early hike in U.S. interest rates ahead of Wednesday’s Federal Reserve policy meeting.
Intraday bias remains on the downside as 21 and 55 EMA trend indicators are crossed downward in the 1 hour charts signalling a mild bearish trend is established on the short term picture. SSRC, Stochastic, RSI and MACD Oscillator indicators are showing bearish momentum is still intact, so am expecting further decline to 1.09473 supports (Weekly S1) in the short term picture. However caution should be applied as 4 hours, Daily and Weekly charts are still in bullish mode. More decline should be expected to 1.08400 if we get a break of 1.09337 supports.
The Federal Reserve will announce its latest statement on monetary policy this Wednesday, and expectations for the U.S. central bank to cut its monthly bond-buying program to $15 billion from $25 billion. Also investors are expecting rate hikes in the U.S sooner than expected around mid 2015, so expect great volatility in the market tomorrow.