The Canadian dollar was soft today, dragged down by weak manufacturing data and plunging crude oil prices. The loonie did not perform that bad, though, considering all the negative factors influencing the currency.
The seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index dropped to 49.1 in August from 50.2 in July. Falling below the 50.0 level, the indicator showed that the sector turned from expansion to contraction.
The Canadian currency often follows moves of crude oil prices as crude is Canada’s biggest export. With futures for the North American grade of oil sinking 3% today, it is not surprising to see the loonie somewhat weak.
The Bank of Canada will announce its decision regarding monetary policy tomorrow. The general consensus is that the BoC will leave interest rates unchanged. This means the focus will be on the wording of the statement.
USD/CAD traded at 1.3325 as of 18:21 GMT today, near the opening level of 1.3323, after rising to the daily high of 1.3383 earlier. EUR/CAD was at about 1.4622, also close to its opening level of 1.4615. CAD/JPY dropped from the open of 79.68 to 79.50 but rebounded from the daily low of 79.19.
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