CAD Boosted as Canadian Manufacturing PMI Hits Four-Year High

Canada's manufacturing PMI surged to its highest level since June 2022, providing a supportive backdrop for CAD pairs including USD/CAD and EUR/CAD. The S&P Global PMI reading marked a fourth consecutive month of expansion, with output, new orders, and employment all accelerating. However, the picture is mixed: input prices rose at their fastest pace in four years, signaling mounting inflationary pressures that could influence Bank of Canada policy decisions. Notably, the expansion appears domestically driven, as new export orders declined for a second straight month, suggesting external demand remains soft. Business confidence also fell to its lowest level since March, tempering the bullish outlook. For USD/CAD traders, the strong domestic manufacturing data could support CAD strength in the near term, but weakening export orders and fading business confidence may limit downside in the pair. Traders should monitor upcoming trade balance data and BoC commentary for further directional cues on CAD crosses.