In Canada, Statistics Canada’s preliminary estimate suggests that factory sales rose by 3.5% month-on-month in March, driven primarily by increased demand in the petroleum and coal products and transport equipment sub-sectors. However, this figure is based on a weighted response rate of approximately 67.1%, which is below the average for the past year, implying that further adjustments may still be required. Regarding trade relations, differences remain between Canada and the US over the review of the USMCA. Canadian Prime Minister Mark Carney stated that US President Trump had not demanded a so-called ‘entry fee’, and that Canada would not make unilateral concessions prior to entering negotiations. Although the three parties had originally planned to complete the review by 1 July, the process faces delays due to the US imposing tariffs on major Canadian imports and the resulting strain on bilateral relations. The Canadian government favours resolving differences through comprehensive negotiations rather than compromising on individual issues, and remains cautiously optimistic about reaching a final agreement.

The US economy is characterised by a combination of resilience and pressure. The labour market remains robust; whilst initial jobless claims rose slightly to 214,000 by mid-April, they remain at historically low levels, indicating that businesses have not yet resorted to large-scale redundancies. However, the number of people claiming continued benefits has risen to 1.821 million, suggesting that some unemployed individuals are finding it increasingly difficult to return to work. Although the conflict in the Middle East has driven up energy prices and heightened uncertainty, its full impact on the labour market has yet to materialise; economists generally expect the associated effects to gradually filter through over the coming months. Looking at overall economic activity, US business sentiment rebounded in April, with the preliminary composite PMI rising to 52.0, returning to expansionary territory. Manufacturing performed particularly strongly, with the PMI rising to 54.0, as firms built up inventories in anticipation of tighter supplies and rising costs; whilst the services sector returned to expansionary territory, growth remained modest, acting as a drag on the overall economy. However, whilst growth has picked up, inflationary pressures are also mounting. The situation in the Middle East has disrupted shipping and supply chains, lengthened delivery times and pushed up energy and commodity prices, leading to a significant rise in both input costs and output prices for businesses. In April, relevant price indices rose to their highest levels in nearly two years, reflecting the intensification of cost-push inflation. Against this backdrop, businesses have become more cautious in hiring, and the momentum for employment growth remains weak.

Looking at the USD/CAD on the four-hour chart, the Bollinger Bands are narrowing, the moving averages are flattening, and the price is oscillating upwards along the upper Bollinger Band, suggesting that the short-term downtrend is likely to reverse. The MACD fast and slow lines have pulled back to near the 0-line, indicating a potential reversal at any moment. Resistance lies near the 200-day EMA and key psychological levels, at 1.375 and 1.38 respectively. The RSI stands at 60, indicating that market sentiment is predominantly bullish. On the daily chart, the Bollinger Bands are narrowing and the moving averages are flattening out; the price has reached the support level of the trend line, making a rebound highly likely. The RSI stands at 44, suggesting that market sentiment is predominantly bearish. The recommended strategy is to buy on dips.

Trading Direction: Buy

Entry Price: 1.37

Target Price: 1.41

Stop-loss: 1.35

Support Levels: 1.35, 1.325, 1.28

Resistance Levels: 1.4, 1.41, 1.42