The Canadian dollar is heading back towards its 30 year highs thanks to a sharp jump in manufacturing sector activity and building permits. Contrary to popular belief, the Canadian economy has proved to be extremely resilient in the face of a strong currency.
The details of the report were not as encouraging, but the headline number of 67.4 was still far stronger than the market?s 61.8 forecast. Building permits also jumped to a record high of 21 percent, which was four times the market?s forecast. At this point, all signs are pointing to stronger Canadian employment numbers tomorrow. The headline IVEY PMI index and the CAD employment number have a loose positive correlation. Meanwhile the New Zealand dollar is also higher after reports that commodity prices increased in New Zealand last month. The Australian dollar did not participate in the rally after the government announced an increase to the minimum wage. Construction sector PMI is due for release tonight. The sharp drop in building approvals suggests that we could see continued weakness.