USDCAD finds support at 1.3850 following four consecutive bearish sessions
May's US manufacturing PMI surprises markets with 52.3 reading
Energy market weakness pressures commodity-sensitive Canadian currency
The 100 PI to USDUSDCAD pair demonstrates renewed strength in early Asian trading hours, currently hovering near 1.3855 after a series of declines. This upward movement coincides with the release of robust US economic indicators that have reinvigorated demand for the greenback.
S&P's latest flash estimates reveal significant improvement across multiple US economic sectors. The composite PMI reading climbed to 52.1 this month from April's 50.6, while manufacturing activity expanded more than anticipated with a 52.3 print. These figures suggest the US economy maintains momentum despite recent concerns about growth slowdowns.
Labor market data further supports the dollar's position. Initial jobless claims dipped to 227,000 for the week ending May 17, slightly better than consensus estimates. However, continuing claims showed a modest increase, reflecting some lingering challenges in the employment landscape.
Meanwhile, the Canadian dollar faces headwinds from softening crude oil benchmarks. As the primary exporter of petroleum to the United States, Canada's currency typically moves in tandem with energy prices. The current dip in oil markets creates additional pressure on CAD valuation, providing secondary support for the USDCAD pair.
Market participants will continue monitoring these competing factors as the trading week concludes. The dollar's fundamental strength appears to be outweighing risk-off sentiment temporarily, though energy market volatility could quickly alter this dynamic.