USD / PRESSURE As the PMI of Canada improves, American data disappoint

• The Canadian dollar increases for a third consecutive session, supported by higher oil prices and a lower US dollar.
• Canada's PMI improves slightly at 46.1 in May, while American factory activity shows a deeper contraction.
• Investors prices in 75% like the Bank of Canada has 2.75% rates on Wednesday, with market orientation to inflation risk.

The Canadian dollar (CAD) extends its victories sequence against the US dollar (USD) for a third consecutive day on Monday, supported by the rise in oil prices and the sustained low greenery.

The latest PMI figures offered additional support to the Huard, Canada's factory activity showing a slight improvement, although it has been in contraction. On the other hand, mixed American manufacturing data weighed on the US dollar, keeping the USD / CAD pair on the defensive below the 1.3700 bar. At the time of writing the editorial staff, the pair is negotiated nearly 1,3698 during the North American session.

The S&P Global Canada Manufacturing PMI increased to 46.1 in May from 45.3 in April, indicating that the sector remains in contraction for a fourth consecutive month. The release and the new commands continued to decrease suddenly. Meanwhile, the ISM's American manufacturing PMI fell to 48.5 in May from 48.7, not exceeding market expectations and marking the strongest contraction since November 2024. The data has highlighted the persistent economic uncertainty and the trade pressures supported, partly motivated by the volatile trade policies of the Donald Trump administration.

For the future, the Bank of Canada (BOC) is expected to announce its interest rate decision on Wednesday. While the markets previously leaned towards a drop in rate, the growth of GDP of the first quarter stronger than expected of 2.2% moved consensus to the maintenance of the current rate of 2.75%. According to Reuters, investors now see about 75% like the BOC leaves unchanged prices.

Derek Holt de Scotiabank firmly rejected the relief in a position entitled “No means of the BOC should cut soon, if at all”. He pointed out that central inflation has constantly raised, even before the complete effects of supply shocks linked to prices settled. “Despite the modest relaxation, other forces maintain central inflation at sticky and high levels,” he noted.