Canada controls inflation better than expected.
The Canadian dollar strengthened today after weakening due to a larger-than-expected decrease in the inflation rate. In recent times, the market had anticipated that inflation would increase significantly, potentially causing economic distress. However, the decreased inflation rate has led investors to believe that the Bank of Canada (BoC) may keep interest rates steady for the entire year. Additionally, strong retail sales figures in the United States have contributed to the strengthening of the Canadian dollar.
Canada's inflation rate decreased to 3.8% year-on-year (YoY) in September, lower than the market's expectation of 4%. This was mainly due to slower growth in food and consumer goods prices. On the other hand, rapidly rising oil prices have accelerated transportation costs.
The increased oil prices are a major concern for several industries, despite ongoing conflicts in the Middle East. The reduction in oil production by OPEC+ remains a significant worry.
Wholesale sales in Canada rose by 2.3% month-on-month (MoM) to 83 billion Canadian dollars in August, with most of the support coming from manufacturing-related products such as machinery, equipment, and raw materials. This aligns with the increasing production capacity in Canada, which is showing signs of improvement.
Foreign investors are starting to reduce their investments in Canadian securities, leaving only 8.47 billion Canadian dollars in August. Moreover, bond holdings have also decreased, with only 5.02 billion Canadian dollars remaining, mainly in government bonds. This indicates that foreign investors are returning to holding U.S. dollars due to higher returns and lower risks.
The yield on Canadian 10-year government bonds has dropped below 4.1% due to softer-than-expected inflation data. In contrast, the yield on 10-year U.S. government bonds has risen to over 4.8% amid concerns that the Fed may raise interest rates soon. Furthermore, there are comments expected from Jerome Powell, the current Fed Chairman, on Thursday.
Techical analysis data (5H)
Resistance: 1.3654, 1.3669, 1.3679
Support: 1.3629, 1.3619, 1.3604
Pivot Points October 18, 2023 02:30 PM GMT+7
| Name | S3 | S2 | S1 | Pivot Points | R1 | R2 | R3 |
| Classic | 1.3604 | 1.3619 | 1.3629 | 1.3644 | 1.3654 | 1.3669 | 1.3679 |
| Fibonacci | 1.3619 | 1.3629 | 1.3634 | 1.3644 | 1.3654 | 1.3659 | 1.3669 |
| Camarilla | 1.3631 | 1.3633 | 1.3635 | 1.3644 | 1.3640 | 1.3642 | 1.3644 |
| Woodie's | 1.3600 | 1.3617 | 1.3625 | 1.3642 | 1.3650 | 1.3667 | 1.3675 |
| DeMark's | - | - | 1.3623 | 1.3641 | 1.3648 | - | - |
Buy/Long 1: If the price touches support in the price range of 1.3619 - 1.3629 but cannot break the support at 1.3629, you may set a TP at approximately 1.3669 and SL at around 1.3604 or according to your acceptable risk.
Buy/Long 2: If the price breaks the resistance in the price range of 1.3654 - 1.3669, you may set a TP at approximately 1.3679 and SL at around 1.3619 or according to your acceptable risk.
Sell/Short 1: If the price touches resistance in the price range of 1.3654 - 1.3669 but cannot break the resistance at 1.3654, you may set a TP at approximately 1.3619 and SL at around 1.3679 or according to your acceptable risk.
Sell/Short 2: If the price breaks the support in the price range of 1.3619 - 1.3629, you may set a TP at approximately 1.3604 and SL at around 1.3669 or according to your acceptable risk.
Technical Indicators October 18, 2023 02:30 PM GMT+7
| Name | Value | Action |
| RSI(14) | 48.714 | Neutral |
| STOCH(9,6) | 31.026 | Sell |
| STOCHRSI(14) | 43.766 | Sell |
| MACD(12,26) | -0.001 | Sell |
| ADX(14) | 16.396 | Neutral |
| Williams %R | -72.308 | Sell |
| CCI(14) | -44.2899 | Neutral |
| ATR(14) | 0.0025 | Less Volatility |
| Highs/Lows(14) | 0.0000 | Neutral |
| Ultimate Oscillator | 41.667 | Sell |
| ROC | -0.183 | Sell |
| Bull/Bear Power(13) | -0.0014 | Sell |
|
Buy:0 Sell:7 Neutral:4 Summary:Strong Sell |
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