USD/CAD Penetrated Below Uptrend Line amid Lower than Expected ISM Manufacturing PMI
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Canada – Current Account
Yesterday, at GMT 12:30 p.m., the Statistics Canada released the quarterly national current account figure, which measures the difference in value between imported and exported goods, services, income flows, and unilateral transfers happened over the last month.
Although the national trade balance figure includes the goods, the current balance offers a more comprehensive account of the national currency demand as it includes services and income flows, as well as unilateral transfers. Hence, binary options traders consider the current account figure to another important leading indicator of a nation’s currency demand, besides trade balance.
In May, the Canada’s current account figure came out at -18.1 billion and the forecast for August was set at -17.2 billion. However, the actual current account number came out slightly lower than what the market was expecting, at -17.4 billion.
United States – Institute for Supply Management (ISM) Manufacturing PMI
Today, at GMT 2:00 p.m., the Institute for Supply Management released its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.
Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, binary options investors can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.
In August, the ISM manufacturing PMI for the United States came out at 52.7 and the forecast for September was set at 52.6. However, the actual reading came out much lower than expected, at 51.1.
Trade Recommendation for the USD/CAD
Since forming a bullish pi bar on June 18, the USD/CAD price went up over 1200 pips over the last few months. However, as the US equity market crashed last week, and the US ISM manufacturing PMI reading came out much lower than expected, the USD/CAD price has penetrated below the uptrend line.
Yesterday, the USD/CAD price formed a bearish outside bar (BEOB), and closed below this uptrend line.
Under the circumstances, it is recommended that traders consider placing a PUT order for the USD/CAD with their binary options brokers, once the price closes below the low of August 31, which is at 1.3116.
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Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com
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