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If you’re looking for an opportunity to trade the news early this week, then Canada’s Ivey PMI release could be your chance to grab some quick pips. But before we come up with some potential trading strategies, let’s first take a look at what the report is all about and how USD/CAD tends to react.

What the heck is the Ivey PMI?

PMI, which is an acronym for purchasing managers’ index, is one of the important gauges of manufacturing activity in an economy. In Canada, this figure is computed by surveying 175 purchasing managers representing various sectors of the industry on business conditions such as employment, production, price levels, new orders, deliveries, and inventories.

A reading below 50.0 indicates that the industry contracted during the month while a reading above 50.0 implies that the manufacturing industry expanded.

What can we expect for the upcoming release?

Canada is set to release its November Ivey PMI on Tuesday 4:00 pm GMT so y’all should set your alarm clocks ready for this event!

The figure is expected to dip from 60.4 to 58.3 during the month, which would reflect weaker industry expansion. Bear in mind though that the actual reading has been coming in better than expected for four out of the last five releases.

How does USD/CAD usually react to the Ivey PMI?

Trading USD/CAD with this report is pretty straightforward. The Loonie typically rallies on stronger-than-expected results, and conversely, it’s not unusual to see the Canadian currency weaken at the sight of sub-50.0 readings or weaker-than-forecasted results.

Also, USD/CAD has a tendency to bounce off the nearest horizontal level immediately after the report is published, continuing in the same direction for the next 30 minutes or so. The move (whether bearish or bullish) can last up to 50 pips.

Take a look at the past couple of releases to see what I mean:

USD/CAD Reaction to September Ivey PMI

USD/CAD Reaction to October Ivey PMI

How can you trade the upcoming release?

You’ve got clear skies ahead if you plan on trading this report, since neither the U.S. nor Canada will be publishing any other major reports around tomorrow’s Ivey PMI release.

If the past two releases are anything to go by, your best bet would be to wait for the report to come out and trade in the direction of the initial 15-minute candle. But remember not to keep your trade open for more than an hour!

Look to take profit after price moves about 30 to 50 pips, and set your stop loss clear of the intraday consolidation or the horizontal level from which the release candle bounced off. Good luck!