Inflation rate in Canada successfully returns to target range.

The Canadian dollar slightly weakened as investors anticipated that the Bank of Canada might further ease monetary policy following the announcement of the latest inflation data. Additionally, Tiff Macklem, the Governor of the Bank of Canada, mentioned that despite inflation returning to the central bank’s target range, borrowing costs and rent prices remain major factors driving inflation, preventing a rapid reduction in interest rates.

The annual inflation rate in Canada hit 2% in August, marking the third consecutive month of inflation decline, and returned to the central bank's target range for the first time in over three years. The slowdown in August inflation was partly due to a 5.1% drop in gasoline prices. Additionally, the prices of clothing and footwear continued to decline. However, housing costs, which account for more than 30% of the Consumer Price Index (CPI), increased by 5.3%, which could cause inflation to stabilize again.

The Composite PMI slightly rose to 47.8 from 47.0 in July, still indicating that private sector activities contracted for the third consecutive month. This decline resulted from a recession in both the manufacturing and service sectors, as new orders rapidly decreased, contrasting with high production capacity. Although input price inflation remained stable, companies continued to try maintaining production levels by slightly reducing their workforce instead, raising concerns about future economic prospects.

Canada's unemployment rate rose to 6.6% in August from 6.4% in the previous month, higher than the market's expectation of 6.5%. This figure indicates that the Canadian labor market continues to slow down as anticipated by the Bank of Canada’s board. The number of unemployed individuals increased by 60,400 from the previous month to 1,458,900, most of whom were from the working-age population. Meanwhile, net employment increased by 22,100 to 20,535,700 people, while wage growth slightly slowed.

Foreign investors increased their investment in Canadian securities by over $10.98 billion in July. Data revealed that the majority of these investments continued to focus on Canadian debt instruments, particularly government bonds, which saw a steady increase of $7.9 billion. Investments in corporate debt instruments amounted to $5.2 billion. Additionally, foreign investment in Canadian stocks increased by $1.9 billion, driven by shares in the trade and transportation sectors.

Techical analysis data (5H)

Resistance: 1.3579, 1.3589, 1.3601

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3545 - 1.3557 but cannot break the support at 1.3557, you may set a TP at approximately 1.3589 and SL at around 1.3535 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3579 - 1.3589, you may set a TP at approximately 1.3601 and SL at around 1.3545 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3579 - 1.3589 but cannot break the resistance at 1.3545 , you may set a TP at approximately 1.3579 and SL at around 1.3601 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3545 - 1.3557, you may set a TP at approximately 1.3535 and SL at around 1.3589 or according to your acceptable risk.

Pivot point September 20, 2024 07:32 PM. GMT+7