Canadian Dollar grinds out meager recovery ahead of Tuesday's US PMI figures

• Canadian Dollar finds room on high side as data-driven markets await US PMI print.
• Canada data remains limited until Wednesday's CAD Retail Sales.
• Tuesday's US PMIs expected to show a slight uptick in activity.

The Canadian Dollar (CAD) is moderately higher on Monday, trading into the green against most of its major currency peers. Monday's thin economic calendar leaves both the Canadian Dollar and the US Dollar (USD) adrift as investors await meaningful data.

Canada brought strictly low-tier data to the table on Monday with an uptick in the Raw Materials Price Index. At the same time, Industrial Product Prices met expectations, printing higher but less than the previous figure. The Canadian New Home Price Index flattened in March, missing forecasts while retreating slightly from the same period last year.

Daily digest market movers: Canadian Dollar extends recovery in steady markets

• Monday’s Canada data saw mixed prints, but market focus remains elsewhere, giving the CAD room to run.
  • Canadian Industrial Produce Prices came in at the expected 0.8% in March, easing back slightly from the previous month’s 1.1% (revised upward from 0.7%).
  • The Canadian New Housing Price Index flatted in March, printing 0.0% versus the forecast steady hold at 0.1%. YoY NHPI eased back -0.4% as housing prices wobble following years of accelerated growth.
  • Canada’s Raw Material Price Index jumped 3.7% in March, vaulting over the forecast 2.9% compared to February’s 2.1%.
• Canadian February Retail Sales due to print in the midweek, forecast to rebound to 0.1% on Wednesday after January's -0.3% decline.
• Tuesday’s US S&P Global Purchasing Managers Index (PMI) will be the key data print for the early week, with the Manufacturing component forecast at 52.0 (previous 51.9) and the Services component also anticipated to print at 52.0 (last 51.7%).
• US Gross Domestic Product (GDP) and US Core Personal Consumption Expenditures (PCE) to dominate market focus in the back half of the trading week.

Technical analysis: Canadian Dollar mounting a slow recovery, sights on 1.3700

The Canadian Dollar was broadly higher on Monday, gaining four-tenths of a percent against the Pound Sterling (GBP) and nearly a third of a percent against the Swiss Franc (CHF) and the Japanese Yen (JPY). The CAD is outperformed by the Australian Dollar (AUD) and the New Zealand Dollar (NZD) as the Antipodeans recover recently lost ground.

The USD/CAD pair fell from last week’s peak of 1.3840, and a bullish recovery attempt fell short after a bearish rejection from the 1.3800 handle. The pair is now targeting 1.3700, which will clear the way for a push toward a supply zone near 1.3550 as the Loonie leaks below technical support at the 200-hour Exponential Moving Average (EMA) near 1.3730.

Looking longer-term, daily candlesticks have the USD/CAD pair poised for a fourth consecutive down day as the Canadian Dollar extends a near-term recovery. The Greenback failed to recapture November’s highs near 1.3900, and momentum threatens to return USD/CAD back to heavy congestion at the 200-day EMA just above the 1.3500 handle.

USD/CAD hourly chart

USD/CAD daily chart