The Bank of Canada may not adjust interest rates in the near future.

The Canadian dollar continues to weaken, driven by the strengthening of the US dollar amid remarks from some Federal Reserve officials suggesting maintaining interest rates until significant signs of inflation reduction emerge. The Bank of Canada is still not considering a rate cut after Canada's business confidence hit a two-year high in April, indicating the resilience of the private sector.

The Manufacturing Purchasing Managers' Index (PMI) decreased by 0.4 points from the previous month to 49.4 in April, marking the 12th consecutive month of contraction. Reduced new orders and export orders necessitated production cuts for various companies. Although the economy slowed slightly, there was an increase in hiring due to ongoing labor market demand. Raw material costs also continued to rise, potentially leading to higher inflation rates.

The Services PMI increased to 49.3 in April from 46.4 in the previous month, indicating a continued contraction in the services sector. Intense competition from new entrants led to price and cost pressures. The higher interest rates also pushed up costs for various service industries, resulting in a slight decrease in employment.

Canada recorded a trade deficit of $2.3 billion in March, exceeding market expectations of a $1.5 billion deficit. This marks a significant deficit since December, driven by a rapid decline in exports while imports continued to rise steadily. Imports increased by 3% annually to $64.8 billion, mainly driven by purchases of farm and fishing products, followed by non-metallic minerals and products. Meanwhile, exports decreased by 1.5% annually to $62.6 billion in March, with rapid declines in exports of non-metallic minerals and products, as well as consumer goods, to the United States, China, Mexico, and Japan.

The Canadian government's budget deficit narrowed to $8.34 billion in February, down from $9.53 billion in the same month last year. Infrastructure spending remained the primary expenditure, while public debt servicing costs increased by over 36.5% due to higher interest rates. Conversely, government revenue increased by 3.1%, driven by growth in personal income tax and other tax revenues.

Techical analysis data (5H)

Resistance: 1.3689, 1.3697, 1.3703

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3669 - 1.3675 but cannot break the support at 1.3675, you may set a TP at approximately 1.3697 and SL at around 1.3662 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3689 - 1.3697, you may set a TP at approximately 1.3703 and SL at around 1.3669 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3689 - 1.3697 but cannot break the resistance at 1.3689, you may set a TP at approximately 1.3669 and SL at around 1.3703 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3669 - 1.3675, you may set a TP at approximately 1.3662 and SL at around 1.3697 or according to your acceptable risk.

Pivot point May 10, 2024 06:12 PM. GMT+7