Canada continues to face challenges as demand slows down.

The Canadian dollar has slightly weakened amidst the U.S. dollar's recovery. Additionally, economic data in the country remains concerning due to reduced inflows of foreign currencies. These factors continue to exert pressure on the Canadian dollar, potentially causing further depreciation in the future. Furthermore, significant economic data from the United States set to be announced today includes non-farm payrolls, unemployment rates, and service sector PMI. Analysts anticipate a slower trend in these economic indicators compared to the previous announcement.

Although Canada's economy is slowing down, the country's central bank has limited room to raise interest rates. However, inflation rates are expected to stabilize further, with a forecasted inflation rate around 3.1%. Canada's exports remain worrisome due to global oil demand concerns, which have led to decreased foreign currency inflows. Canada heavily relies on exports, primarily oil, making this a critical issue for the nation.

Canada's manufacturing Purchasing Managers' Index (PMI) dropped to 45.4 in December, marking the fastest decline since the pandemic's onset. This decline is a result of rapidly shrinking new orders due to swiftly contracting consumer demand caused by increased prices passed on from rising costs. Additionally, high-interest rates have compelled companies to reduce staff and increase inventory due to the contracting demand. Despite this, companies maintain a moderate level of confidence in the 2024 economic outlook.

The service sector PMI slightly increased to 44.6 in December, with a rapid decrease in new business activities. The sector faced weakening demand due to higher interest rates. Continuous concerns about rising import and export prices remain alarming. However, confidence has reached an eight-month high, with businesses anticipating a reduction in interest rates, positively impacting economic activities and alleviating concerns.

Canada's 10-year government bond yields increased to 3.18%, rebounding from a seven-month low of 3.06%. However, Canadian bond yields remain near multi-month lows due to the sluggish economic data. Additionally, upcoming announcements about the unemployment rate on Friday are expected to show a slight increase in job vacancies, according to investor forecasts.

Techical analysis data (5H)

Resistance: 1.3378, 1.3389, 1.3405

Support: 1.3351, 1.3335, 1.3324

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3335 - 1.3351 but cannot break the support at 1.3351, you may set a TP at approximately 1.3389 and SL at around 1.3324 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3378 - 1.3389, you may set a TP at approximately 1.3405 and SL at around 1.3335 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3378 - 1.3389 but cannot break the resistance at 1.3378, you may set a TP at approximately 1.3335 and SL at around 1.3405 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3335 - 1.3351, you may set a TP at approximately 1.3324 and SL at around 1.3389 or according to your acceptable risk.

Pivot point January 5, 2024 03:45 PM. GMT+7