More Positive Signs from the Economic Data

The economic data of the last few months has shown that the global economy is in a steep slowdown, although the US economy was holding up well, particularly the employment sector. This has been keeping the USD bullish with the idea of further rate hikes from the FED, while risk assets have suffered a double hit from both these factors.

But, in the previous two weeks, the economic data showed a further slowdown, which affected US employment as well. This sent the USD lower and improved risk sentiment since we’re still in the “good data is bad for risk, and bad data is good” mode in financial markets.

Risk assets rallied as traders were not expecting the FED to raise interest rates anymore. But, this week we have seen some improvement in certain sectors. Early in the week, we saw the Caixin services jump above 50 points, which means leaving contraction behind and expanding again. on Wednesday the ISM services report jumped higher, showing that the service sector is not heading into recession and is instead expanding at a decent pace.

Yesterday we got the unemployment claims showing another slowdown and indicating that the employment sector is in good health, with Unit Labor Costs being revised higher. After that, the Ivey PMI from Canada jumped to 53.5 points, leaving behind the contraction in just one month. The odds of a November hike by the FED increased again yesterday after the lower unemployment claims numbers, which continue to help the USD and send risk currencies down. We sold Gold yesterday, after the rejection at moving averages, indicating selling pressure. Despite that, the CAD is one of the worst-performing currencies today.

Canadian Ivey PMI Manufacturing Survey

• August Ivey PMI 53.5 points vs 48.6 points prior
• July Ivey PMI was 48.6 points
• Non-seasonally adjusted vs 45.2 prior

USD/CAD Live Chart

USD/CAD