BoC may hold interest rates as inflation rises again.

The Canadian dollar has strengthened rapidly, driven by a weakening U.S. dollar. Additionally, it is buoyed by rising core inflation, leading investors to lower expectations that the Bank of Canada will further ease monetary policy. Meanwhile, the U.S. services sector has contracted sharply, the most in four years, with business activity and orders declining. Unemployment benefit claims have continued to rise for the ninth consecutive week, and private sector job growth in June slowed significantly, prompting forecasts that the Federal Reserve may soon cut interest rates.

Crude oil prices have continued to rise, reaching their highest level in two months, due to concerns about supply slowdowns from increasingly severe natural disasters and escalating conflicts in the Middle East, bolstering Canada's key exports.

The BoC forecasts that Canada's GDP will grow by 0.1% in May, driven by increases in the manufacturing, real estate, finance, and insurance sectors. However, retail sales have slightly declined, leading to predictions that household spending may decrease in the future, which could result in companies reducing their workforce to cut production costs.

Canada's unemployment rate rose to 6.4% in June, up from 6.2% the previous month, exceeding market expectations of 6.3%. This increase aligns with the Bank of Canada's view that higher interest rates will directly impact the Canadian labor market, supporting the necessity for central bank policymakers to consider lowering interest rates to help the economy recover. The number of unemployed people rose by 42,000 from the previous month to 1.4 million, with most of the increase in unemployment among youths aged 15-24.

The services PMI fell to 47.1 in June 2024 from 51.1 in May, signaling contraction once again. This contraction in the services sector resulted from a decline in new business volumes and a weaker economy due to rising interest rates. Only the finance and insurance sector managed to grow. Additionally, employment growth has started to slow, while cost inflation has slightly decreased, alleviating some price pressures.

Techical analysis data (5H)

Resistance: 1.3662, 1.3681, 1.371

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3585 - 1.3615 but cannot break the support at 1.3615, you may set a TP at approximately 1.3681 and SL at around 1.3567 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3662 - 1.3681, you may set a TP at approximately 1.371 and SL at around 1.3585 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3662 - 1.3681 but cannot break the resistance at 1.3662, you may set a TP at approximately 1.3585 and SL at around 1.371 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3585 - 1.3615, you may set a TP at approximately 1.3567 and SL at around 1.3681 or according to your acceptable risk.

Pivot point July 5, 2024 09:40 PM. GMT+7