POWER: Weekly News Highlights MNI Power Service Part 2/2 Week 44

Canadian Manufacturing PMI softened in September, to 47.7 (no consensus) from 48.3 prior in what was an overall weak report. August had marked a 7-month high for the index, with the latest move lower keeping it below the 50 mark for an 8th consecutive month.

• The report showed poor demand, production, exports, and employment in the month, suggesting that a nascent pickup in activity over the summer (highlighted by better-than-expected GDP in July followed by anticipated flat growth in August) lacks momentum, at least in the beleaguered manufacturing sector. Per the S&P Global report:
• "Both output and new orders contracted in September, and at quicker rates than in August. Panellists continued to bemoan the adverse impact on demand of tariffs and wider economic uncertainty. Production and new orders have now fallen for eight months in a row. New export sales were again especially hard hit due to tariffs, with firms again pointing to continued weakness in sales to the United States. The lack of overall new orders and cuts to production meant firms generally chose to not replace leavers at their plants. Some firms also reported enforced layoffs. The net result was a decline in employment for an eighth successive month, although the rate of contraction was modest and the softest since February."
• While "Tariffs meanwhile remained an ongoing source of cost pressures in September and "Input prices again rose sharply", "the rate of inflation eased noticeably since August and was the second-lowest of the year so far." And importantly for the BOC's consideration, "Manufacturers struggled to pass on their higher input costs
  to clients in the form of increased selling prices during the month. This was highlighted by the latest data on output charges, which increased only modestly in September and to the softest degree in nearly a year. Panellists attributed their lack of pricing power to market competition and a soft demand environment."
• We get the Services/Composite PMI figures on Friday.

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 151.21 High Mar 28 
• RES 2: 150.92 High Aug 1 and a key resistance
• RES 1: 148.84/149.96 High Sep 30 / 26 and the bull trigger   
• PRICE: 146.64 @ 14:45 BST Oct 1
• SUP 1: 146.59 Intraday low
• SUP 2: 146.36 Trendline support drawn from the Apr 22 low   
• SUP 3: 145.49 Low Sep 17 and a pivot support
• SUP 4: 144.23 Low Jul 7 

USDJPY continues to weaken as the retracement from last week’s high print extends. The move down has resulted in a clear breach of the 50-day EMA, at 147.60. This signals scope for a deeper retracement and exposes the key short-term pivot support at 145.49, the Sep 17 low. A clear break of this level would cancel a recent bull theme. On the upside a reversal higher would refocus attention on resistance at 149.69, the Sep 26 high and a bull trigger.

• MNI: US SEP FINAL MANUF PMI 52.0 (52.0 FLASH, 53.0 AUG)