USD CAD extends gains on weak Canadian manufacturing sales pressured crude oil

USD/CAD extended its gains on Monday to hit a new one-and-a-half month high approaching the key 1.3400 resistance level after the Canadian dollar fell further on worse-than-expected manufacturing sales data from Canada.

Manufacturing sales in Canada declined by 1.5% in September following August’s data that was revised lower from a 0.2% decline down to a 0.6% decline. September’s 1.5% drop stood in stark contrast to the previous consensus forecast for a 0.3% increase.

This rather dismal economic data was exacerbated on Monday by crude oil prices that continued to be pressured after plunging for the past week and a half, weighing down the energy-correlated Canadian dollar.

Also contributing to USD/CAD’s bullish extension was a relatively strong US dollar that continues to be supported by market expectations of a December interest rate hike by the US Federal Reserve.

Upcoming events that could help (or hinder) the current bullish outlook for USD/CAD include Tuesday’s CPI inflation readings out of the US, Wednesday’s minutes from the Fed’s October meeting as well as US crude oil inventories, and Friday’s CPI and retail sales data from Canada.

From a price perspective, USD/CAD continues to inch up towards its next major target at the noted 1.3400 resistance level, followed by September’s 11-year high of 1.3456. Any further push above that high could then target the 1.3600 resistance level, which would confirm a continuation of the longstanding bullish trend. Tentative downside support on any pullback now resides around the 1.3200 support/resistance level.