10:00am (NY Time) CA IVEY PMI Forecast 55.1 Previous 51.9
ACTION: USD/CAD BUY 52.0 SELL 58.0
We’ll focus on the IVEY PMI (IVEY Purchasing Manager’s Index) from Canada today, it is the equivalent of both ISM PMI’s out of US where purchasing managers of all sectors of the economy participate in this survey. And as with PMIs, they are all considered as leading indicators with the medium point at 50, therefore a reading of above 50 would be considered as expansion in the economy whereas a reading below 50 would be considered as contraction in the economy.
Our tradable surprise factor is 3.0 as it has provided a good historical track record; we need to get either a 58.0 or 52.0 (based on a forecast figure of 55.0) for us to take a trade. IVEY PMI is usually tradable before the Canadian Employment Changes and not after when scheduled at the same day. With this Friday’s Employment Changes release, this PMI may fuel some fundamental sentiment in the CAD currency if we get a strong/weak employment component out of this release.
With USD/CAD lingering at the parity level, if we get a significant positive release, market could make an attempt to take out 1.0000 level; if it is taking out decisively, according to analysts featured on Bloomberg, we could see up to 0.9700 in the next few weeks.
DEFINITION
“The Ivey Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.”
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OMG.
I got killed on this Ivey PMI number.
It was a positive number, but the CAD fell in value (i.e. USD/CAD increased!!!).
wtf!!!??? holy moly … i think it had something to do with crude oil inventories coming out about 30mins after.
Mike:
You have to look at the context of the market. For one obvious reason is the psychological level at the parity, or 1.0000 on USD/CAD. Yes, the number is positive, but for one thing it didn’t really hit our tradable deviation, and if you have read my analysis, this is what I warned about “With USD/CAD lingering at the parity level, if we get a significant positive release, market could make an attempt to take out 1.0000 level; if it is taking out decisively, according to analysts featured on Bloomberg, we could see up to 0.9700 in the next few weeks.” Unfortunately, we saw about 5 to 10 pips of movement beyond 1.0000, then bounced back. That should be your first clue that market isn’t ready to break below… As a matter of fact, I called a BUY at 1.0000 in the trade after seeing it unable to break below.
Henry