Canada still faces issues with inflation and increasing unemployment.

The Canadian dollar steadily strengthened before weakening to around 1.34 Canadian dollars per US dollar. This is primarily due to the US dollar gaining strength as investors begin to adjust their expectations regarding the Federal Reserve's interest rate cuts. Concerns persist regarding Canada's economic situation, as indicated by the PMI figures in both the service and manufacturing sectors. Additionally, high unemployment rates and uncertainties regarding the Bank of Canada's future decisions are adding to worries about the slowing economy, which could impact fourth-quarter GDP growth.

Canada experienced a significant decrease in its trade surplus, dropping to 1.6 billion Canadian dollars in November from an earlier surplus of 3.2 billion Canadian dollars. The rise in imports, coupled with a decline in exports, remains a significant current issue.

Imports into Canada increased by 1.9% to 64.2 billion Canadian dollars, with a substantial rise in imports across 8 out of 11 product groups. Notably, energy product purchases surged by 11.6%, primarily due to increased purchases of gasoline and aircraft fuels from the United States. Additionally, imports of general-purpose machinery rose by 7.7%, while electronic and electrical equipment imports increased by 4.7%.

On the other hand, Canadian exports decreased by 0.6% to 65.74 billion Canadian dollars, marking the first decline since June. Decreases were notable in metal and non-metallic mineral exports by 6.5%, primarily within the gold, silver, and platinum group metals category. Moreover, aircraft and transportation equipment exports dropped by 16.8%. Furthermore, the country's main export, crude oil, declined to 12.20 billion Canadian dollars from 12.46 billion Canadian dollars.

Canada's unemployment rate remains at a high of 5.8% as of December, indicating ongoing weaknesses in the Canadian labor market. This aligns with other economic indicators, potentially prompting the Bank of Canada to consider future monetary policy easing. While the number of unemployed increased by 4,800 to 1,245,200, job positions rose by only 100, leaving Canada's employment level almost unchanged at 20,312,600 positions.

The yield on Canada's 10-year government bonds increased rapidly to 3.3% in early January, bolstered by robust wage data in the United States and diminished expectations of interest rate cuts. Canada's stable inflation rate has postponed the Bank of Canada's anticipated rate cuts, despite economic sluggishness and a growing unemployment trend.

Techical analysis data (5H)

Resistance: 1.3393, 1.3404, 1.3411

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3370 - 1.3376 but cannot break the support at 1.3376, you may set a TP at approximately 1.3404 and SL at around 1.3358 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3393 - 1.3404, you may set a TP at approximately 1.3411 and SL at around 1.3370 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3393 - 1.3404 but cannot break the resistance at 1.3393, you may set a TP at approximately 1.3370 and SL at around 1.3411 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3370 - 1.3376, you may set a TP at approximately 1.3358 and SL at around 1.3404 or according to your acceptable risk.

Pivot point January 10, 2024 01:46 PM. GMT+7