The Bank of Canada’s Business Outlook Survey for Q3 2019 was released a short while ago. The report indicated that business sentiment in the country had improved, although there were greater differences across regions than ever before.
According to the report:
- Moderate sales growth lay ahead from the indicators used in predicting growth of future sales.
- The report also noted that Quebec and most regions had positive sales expectations, but these expectations were negative in the Prairies.
- Trade tensions were weighing on foreign demand, even as this continued to support the prospects of export sales.
- Investment and hiring plans were healthy, but mainly in areas outside of the energy-producing regions.
- There was elevation in the proportion of firms that reported pressures on production capacity as well as rising labour shortages, mostly around British Columbia Central Canada.
- Credit conditions had marginally eased in the last three months.
- Majority of businesses polled expect the inflationary rate to lie in the lower half of the Bank of Canada’s control band.
The Business Outlook Survey Indicator experienced an uptick , but nowhere near the 2017 and 2018 highs.
The report is widely used to predict economic conditions of the country because the business activities of its survey targets form the crux of Canada’s GDP.
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USDCAD Intraday Outlook
The report was regarded as generally positive for the Canadian Dollar. As such, the USDCAD has given back the gains it made from the retail sales report, and is now trading at 1.3085. This is in keeping with the view that any trades based on the retail sales numbers needed to be short and closed due to possibility of distortion from the Bank of Canada Business Outlook Survey.
Near-term support continues to remain at 1.3065 (today’s S1 pivot support). A break below this area by the daily candle opens a pathway to 1.3011, with 1.3047 (S2 pivot) serving as the only support pitstop on the way down.
The near-term resistance lies around 1.3150. A break above this area targets 1.3225 (38.2% Fibonacci retracement) and 1.3290 (50% Fibonacci retracement level), in sequential order if positive momentum is strong.