Canada Markit March manufacturing PMI 58.9 vs 56.6 prior

Markit PMI canada
  • Record high reading (series started in 2011)
  • Prior was 56.6
  • Input cost and output price inflation both accelerate to series highs
  • Looking ahead, firms were upbeat about their growth prospects in the year ahead with sentiment improving

Shreeya Patel, Economist at S&P Global, said:

“Canada’s manufacturing sector again enjoyed a bustling month of trading in March to conclude the first quarter of 2022 with a record improvement in business conditions. Key to growth were robust uplifts in output, new orders and purchases. Staffing levels meanwhile continued to expand while further signs of capacity pressures will ensure workers are kept busy over the spring and summer months.

“Though, while data continues to look positive at first glance, severe concerns are apparent upon deeper inspection. A common theme in the latest survey were further expectations of material scarcity, delivery delays and future price hikes. Another severe lengthening of delivery times supported concerns, which is likely to persist even though global pandemic restrictions are expected to ease further.

“Consumers meanwhile stocked up on inputs despite intense cost pressures. In fact, latest data revealed survey-record increases in output and input price  inflation 
Inflation

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect
forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.

Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
Read this Term
. With demand showing no signs of letting up and the knock-on effects of the war in Ukraine, we can expect to see prices rising at elevated rates for at least the duration of the year.”

 CAD 
CAD

The Canadian dollar (CAD) is the official currency of Canada and at the time of writing is the fifth most-held reserve currency in the world behind only the US dollar, euro, Japanese yen, and British pound.The CAD is commonly referred to as the Loonie by
forex analysts and traders. At the time of writing, the CAD accounts for 2% of all global currency reserves.Its appeal is strong among central banking authorities given Canada’s economic strength, sovereignty, and historic stability.Originally introduced in 1858, the CAD has since its inception maintained a strong tie to the US dollar.This is due to the high degree of trade between the two countries, with the United States receiving the vast majority of Canadian exports, with Canada in turn importing over half of its goods from its southern neighbor. For brief periods of time the CAD has been fixed to the US dollar over its history. Presently, the Bank of Canada (BoC) is responsible for intervening to maintain the value of the currency.What Factors Affect the CAD?Forex traders tune into a variety of factors and metrics when trading the CAD. The value of the CAD is strongly correlated to the strength of global commodity prices such as oil.As a producer and exporter of oil and other commodities, Canada benefits from stronger crude oil prices. When commodity prices rise, Canada’s terms of trade also generally improve, and vice versa.Furthermore, a number of domestic factors can also influence the CAD. This includes interest rates set by the BoC, domestic inflation rates, trade surpluses, and foreign investment & direct payments.

The Canadian dollar (CAD) is the official currency of Canada and at the time of writing is the fifth most-held reserve currency in the world behind only the US dollar, euro, Japanese yen, and British pound.The CAD is commonly referred to as the Loonie by forex analysts and traders. At the time of writing, the CAD accounts for 2% of all global currency reserves.Its appeal is strong among central banking authorities given Canada’s economic strength, sovereignty, and historic stability.Originally introduced in 1858, the CAD has since its inception maintained a strong tie to the US dollar.This is due to the high degree of trade between the two countries, with the United States receiving the vast majority of Canadian exports, with Canada in turn importing over half of its goods from its southern neighbor. For brief periods of time the CAD has been fixed to the US dollar over its history. Presently, the Bank of Canada (BoC) is responsible for intervening to maintain the value of the currency.What Factors Affect the CAD?Forex traders tune into a variety of factors and metrics when trading the CAD. The value of the CAD is strongly correlated to the strength of global commodity prices such as oil.As a producer and exporter of oil and other commodities, Canada benefits from stronger crude oil prices. When commodity prices rise, Canada’s terms of trade also generally improve, and vice versa.Furthermore, a number of domestic factors can also influence the CAD. This includes interest rates set by the BoC, domestic inflation rates, trade surpluses, and foreign investment & direct payments.
Read this Term
was unchanged on this report but it’s a good sign for the currency. I expect some very strong economic numbers from Canada in the months ahead.

LEAVE A COMMENT

Your email address will not be published.