Canadian Dollar Reaches a 2-Week High on an Improved PMI

Canadian Dollar Reaches a 2-Week High on an Improved PMI
Talking Points: 
•Canada Ivey PMI significantly beats expectations at 57.2
•Canadian building permits rise 8.5% in February
•Canadian Dollar rises to a 2-week high

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The Canadian Dollar has reached a new 2-week high against the US Dollar, as two separate Canadian economic releases both beat expectations and rose to multi-month highs. 

The Ivey Purchasing Managers Index was reported at 57.2 in February, which was a 4-month high and significantly beat expectations for a dip to 53.1 from 56.8 in January. It was only the second consecutive month that the index was reported above 50.0, indicating expansion in activity according to surveyed purchasing managers. Also reported on Thursday morning, Building Permits rose 8.5% in February, beating expectations for a 1.7% rise and a reversal from the revised 4.8% decline in permits issued in January. 

Just yesterday, the Bank of Canada announced after its March meeting that the next rate change direction will depend on new data. Last week, Canadian GDP for Q4 was reported at 2.9% and economic growth was revised higher for Q1 and Q2 of 2013. Therefore, continued flow of improved economic data may allow arguments for a BoC rate increase down the line. 

The Canadian Dollar has rallied about 70 pips against the US Dollar since the first Building Permits release, and USD/CAD may next find support by a monthly low at 1.0910.
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