USD/CAD extends losses to 1.3130 area on upbeat Canada data

• Manufacturing sales in Canada rose more than expected in August.
• Industrial production in the United States (US) contracted in September.
• Crude oil lost momentum after the EIA data showed large increase in crude oil stocks.  

After spending the majority of the day moving sideways near the 1.32 handle, the USD/CAD pair turned south during the American trading hours and fell to its lowest level since late July at 1.3131. As of writing, the pair was trading at 1.3135, losing 0.5% on a daily basis.

Earlier in the day, Statistics Canada reported  that manufacturing sales in Canada rose 0.8% in August following July’s contraction of 1.3% and surpassed the market expectation of 0.6%. On the other hand, the ADP’s Employment Change came in at 28,200 in Canada to miss analysts’ estimate of 56,500. However, ADP’s August reading got revised up to 109,900 from 49,300 to help the Loonie preserve its strength.

In the meantime, the weekly report published by the Energy Information  Administration (EIA) showed that crude oil stocks in the US increased by 9.3 million barrels and caused crude oil to start erasing a portion of daily gains to keep the pair’s losses limited for the time being.

US Dollar Index pushes lower on dismal data

Meanwhile, the Federal Reserve’s monthly publication revealed that industrial production and manufacturing production contracted by 0.4% and 0.5%, respectively, to remind investors of the manufacturing sector’s weakness. The US Dollar Index extended its slide on the disappointing data and was last down 0.37% on the day at 97.65.

Commenting on the US data, “Looking ahead the outlook for manufacturing remains poor. Global economic weakness is hurting business sentiment and is resulting in weaker export growth,” ING analysts said. “The strength of the dollar is compounding the problem and then when we add in the lingering negatives from the US-China trade war there is seemingly little to be optimistic about right now.”

Technical levels to consider