Service sector activity in Canada has significantly slowed down.

The Canadian dollar slightly weakened in October due to weak economic data, prompting expectations of more relaxed monetary policies by the Bank of Canada. Meanwhile, the US dollar has rapidly strengthened due to the escalating conflict in the Middle East, bolstered by strong economic data and increased demand for safe-haven assets.

Canada's manufacturing PMI rose to 50.4 in September from 49.5 in August, indicating signs of expansion in the manufacturing sector for the first time since 2023, driven by a slight increase in new orders. It was further supported by domestic demand and the introduction of new products. However, export orders continued to decline for the 13th consecutive month. On the cost side, production costs remained elevated, while the sluggish economic conditions limited the ability of companies to raise prices, leading to only modest revenue growth.

On the other hand, the services PMI dropped to 46.4 from 47.8 in August, marking the fourth consecutive month of contraction in the service sector, driven by weak demand amid geopolitical uncertainty and expectations of an impending rate cut by the Bank of Canada. Employment in the sector also continued to decline for the second straight month, as companies were forced to lay off workers and delay hiring to cut costs as much as possible.

However, GDP in Canada is expected to remain steady in August due to higher oil and natural gas production. Nonetheless, the recent slowdown in the manufacturing and service sectors remains a major factor holding back stronger GDP growth. Additionally, rising transportation costs have pushed up the costs of producing other goods and services.

Canada's business confidence index, which reflects long-term expectations for business performance over the next 12 months, fell to 55 in September. A deeper look into the details reveals significant variations across industries. The agricultural and educational sectors continue to show high levels of confidence, while the service and wholesale trade sectors are seeing continued declines in sentiment.

Techical analysis data (5H)

Resistance: 1.3593, 1.3602, 1.3613

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3562 - 1.3572 but cannot break the support at 1.3572, you may set a TP at approximately 1.3602 and SL at around 1.3552 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3593 - 1.3602, you may set a TP at approximately 1.3613 and SL at around 1.3562 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3593 - 1.3602 but cannot break the resistance at 1.3562, you may set a TP at approximately 1.3593 and SL at around 1.3613 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3562 - 1.3572, you may set a TP at approximately 1.3552 and SL at around 1.3602 or according to your acceptable risk.

Pivot point October 4, 2024 10:02 PM. GMT+7