USD/CAD off session lows after strong US ISM manufacturing data

US dollar distanced from the lowest point, recorded today against its Canadian peer, following the release of upbeat ISM manufacturing report out of the United States.

USD/CAD slid to a session low at 1.0507 at 13:22 GMT, the pairs lowest point since August 30th, after which consolidation followed at 1.0529, down by 0.21% for the day. Support was likely to be found at August 30th low, 1.0478, while resistance was to be encountered at current session high, 1.0560.

The ISM manufacturing index in the United States came in at 55.7 in August, exceeding preliminary estimates of a value of 54.0, while in July the index stood at 55.4. Values above the key level of 50.0 usually are considered an indication that activity in the sector has expanded.

Additionally, earlier today Markit research group said that the final value of the US manufacturing PMI decreased to 53.1 in August from the initially estimated value of 53.9 in the middle of the preceding month. This results, showing a bit greater optimism than data, released by the ISM, came in consonance with the observed moderate improvement in overall business activity in the United States, according to Markit.

Meanwhile, investors’ risk appetite strengthened, after it became clear that Chinese manufacturing PMI increased to a reading of 51.0 in August, or the highest point in 16 months, from 50.3 in July, while Chinese non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 during August from 54.1 in July. In addition, in Italy and Spain activity in the sector of manufacturing returned to expansion zone (above 50.0 reading) for the first time since 2011.

Focus now turned to Fridays non-farm payrolls out of the United States.

Elsewhere, the loonie, as Canadian dollar is also known, was higher against the euro, with EUR/CAD cross decreasing by 0.42% to trade at 1.3862 at 14:47 GMT. The dollar index reacted with a climb to the above mentioned data points, rising 0.2% to 82.535, while EUR/USD pair fell to a session low at 1.3144 at 14:05 GMT. GBP/USD cross also slid to its lowest level today at 1.5529 at 17:05 GMT.