The Bank of Canada may further raise interest rates.

The Canadian dollar has strengthened to around 1.325 Canadian dollars per US dollar, reaching a new high since November. Additionally, it has been supported by the stable inflation rate of 3.1%, leading investors to anticipate the possibility of another interest rate hike by the Bank of Canada. Furthermore, the Federal Reserve has signaled a potential interest rate cut next year, contributing to the Canadian dollar's strength against the US dollar.

The continuous increase in Canada's government deficit has reached 6.96 billion Canadian dollars in October, up from 1.076 billion Canadian dollars in the same month last year. Expenditures have risen by 12.1% to 41.7 billion Canadian dollars compared to the previous year, while government revenue decreased slightly by 1.6% to 34.747 billion Canadian dollars, mainly due to a 1.7% drop in tax revenue and a 21.3% decrease in other sources of income.

Canada's Gross Domestic Product (GDP) is expected to grow by 0.1% in November. Expectations are that sectors like manufacturing, transportation, agriculture, and hunting will receive additional support following a decline in retail sales in October. Additionally, mining and quarrying increased by 1%, along with increased production of oil and natural gas.

Retail sales in Canada increased by 0.7% monthly, rebounding after an anticipated slowdown. Major increases were seen in automobile and parts dealers by 1.1%. Furthermore, sales continued to rise in general merchandise stores by 2% and in health and personal care stores by 1.5%.

The average weekly earnings of non-agricultural employees in Canada increased by 4% annually to 1,222 Canadian dollars in October. The highest profits were seen in management of companies and government enterprises, rising by 11.4% to 1,731 Canadian dollars. Cultural industries saw an 8% increase, reaching 1,695 Canadian dollars. The highest income growth was observed in Nova Scotia at 5.1% and British Columbia at 4.8%.

The yield on Canada's 10-year government bonds increased above 3.21%, rising from a seven-month low of 3.05%, supported by the latest inflation data. This could lead the Bank of Canada to resort to a tighter monetary policy once again. Additionally, the slight expansion of GDP from the previous month serves as another positive factor, allowing the Bank of Canada enough room to consider raising interest rates further. Consequently, the demand for Canadian government bonds decreased, leading to increased returns.

Techical analysis data (5H)

Resistance: 1.3255, 1.3263, 1.3268

Support: 1.3243, 1.3237, 1.3230

Source: Investing.com