Canada's inflation rate has rapidly decreased.

Canada's inflation rate dropped sharply to 1.6% in September, down from 2% the previous month, marking the lowest level since 2021. This figure is below the Bank of Canada's 2% target, leading investors to speculate that the central bank may further reduce interest rates. However, additional economic data will be required to support such decisions.

The significant drop in inflation was largely due to a 10.7% decrease in gasoline prices, driven by falling crude oil prices. In the real estate sector, although rental prices remain high, there are signs that rental growth rates have started to slow down in recent months. The Bank of Canada recently lowered its policy interest rate by 50 basis points to 3.75%, in line with market expectations, and signaled the possibility of further rate cuts if economic growth meets expectations. The decline in inflation remains a key factor in the bank’s interest rate decisions.

Moreover, the Bank of Canada noted that consumer and household spending trends have started to slow, contributing to a softening labor market, as evidenced by an increase in the unemployment rate to over 6.5%—the highest level in two years. The central bank forecasts GDP growth of 1.2% this year and 2.1% next year.

A survey shows that foreign investors increased their investment in Canadian securities, totaling CAD 9.97 billion in August, indicating a positive trend slightly above expectations. Most of this investment was in bonds, with a net value of CAD 21.9 billion, while foreign investors sold Canadian equities worth CAD 11.9 billion. There is an expectation among investors that the Canadian economy may slow down in the near future.

The yield on Canada's 10-year government bonds rose to 3.28%, influenced by higher U.S. Treasury yields, as stronger-than-expected U.S. economic data suggested that the Federal Reserve might delay interest rate cuts. Investors are currently assessing Canada's economic outlook following the decline in inflation to the central bank’s target range, a 50-basis-point policy rate cut, and ongoing signs of a slowing labor market.

Techical analysis data (5H)

Resistance: 1.3898, 1.3913, 1.3943

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.3823 - 1.3853 but cannot break the support at 1.3853, you may set a TP at approximately 1.3913 and SL at around 1.3808 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.3898 - 1.3913, you may set a TP at approximately 1.3943 and SL at around 1.3823 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.3898 - 1.3913 but cannot break the resistance at 1.3823, you may set a TP at approximately 1.3898 and SL at around 1.3943 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.3823 - 1.3853, you may set a TP at approximately 1.3808 and SL at around 1.3913 or according to your acceptable risk.

Pivot point October 26, 2024 02:54 PM. GMT+7