Canada's economy is showing signs of slowing down.

The Canadian dollar has strengthened to a one-month high as investors are relieved that the trade tariffs set to take effect on April 2 will not be fully implemented, with some countries likely to receive exemptions. Indications that President Trump may adopt a three-tier tariff system with partial exemptions suggest that Canada might face the lowest level of tariffs in the future. However, rising oil prices over the past week and the resulting appreciation of the Canadian dollar have significantly supported the country's export value.

In addition to the increase in oil prices due to concerns over global oil supply tightening, President Donald Trump announced a 25% import tariff on oil from the U.S. Geopolitical tensions and uncertainty surrounding tariffs have also led to a rise in gold prices. Meanwhile, investors remain hopeful as there are indications that the U.S. is likely to take a more neutral and targeted approach in imposing future tariffs.

The Business Barometer Index, which measures business expectations for the next 12 months, plummeted 24.8 points to a record low of 25.0 in March. This level is lower than those seen during the 2020 pandemic, the 2008 financial crisis, and the 9/11 attacks. It highlights the increasing impact of tariffs and additional trade restrictions, leading to a severe decline in business confidence. Companies are more inclined to lay off employees rather than hire new ones, while the average increase in goods and services prices over the next 12 months has surged to the highest level in six years.

Retail sales in Canada dropped by 0.4% from the previous month in February, following a 0.6% decline in January, reaching 69.4 billion CAD. Retail sales fell sharply in the automobile and auto parts sector, as new car dealership sales declined rapidly. Meanwhile, sales in the food and beverage sector slowed slightly, indicating a reduction in consumer spending power.

The average weekly earnings of non-farm employees in Canada rose by 5.5% year-over-year to 1,294.26 CAD in January, continuing an upward trend following a 5.9% increase in December. Seventeen out of twenty sectors reported increased earnings, with the highest rise seen in mining, quarrying, and oil extraction, which surged by over 8.8% to 2,470 CAD. In contrast, industries related to wood processing and construction saw a slight slowdown, rising only 0.3% to 1,500 CAD.

The yield on Canada's 10-year government bonds surged above 3.1%, up from a two-year low of 2.83%, as recent inflation data raised concerns about increasing price pressures and changes in monetary policy. In February, higher core inflation led the market to anticipate that the Bank of Canada might ease its policy sooner, despite the recent 25-basis-point interest rate cut.

Techical analysis data (5H)

Resistance: 1.4322, 1.4334, 1.435

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 1.4278 - 1.4294 but cannot break the support at 1.4294, you may set a TP at approximately 1.4334 and SL at around 1.4266 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 1.4322 - 1.4334, you may set a TP at approximately 1.435 and SL at around 1.4278 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 1.4322 - 1.4334 but cannot break the resistance at 1.4322, you may set a TP at approximately 1.4278 and SL at around 1.435 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 1.4278 - 1.4294, you may set a TP at approximately 1.4266 and SL at around 1.4334 or according to your acceptable risk.

Pivot point March 28, 2025 09:45 PM. GMT+7