USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US PCE came in line with expectations.
- The US Jobless Claims missed expectations although the data is still in the recent ranges.
- The latest US ISM Manufacturing PMI missed expectations by a big margin.
- The US Consumer Confidence missed expectations across the board.
- The market expects the first rate cut in June.
CAD
- The BoC left interest rates unchanged at 5.00% as expected and dropped the language about being prepared to hike if needed.
- The latest Canadian CPI missed expectations across the board with the underlying inflation measures falling, which will be a welcome development for the BoC.
- On the labour market side, the latest report beat expectations but we saw a contraction in full-time employment and a fall in wage growth.
- The Canadian PMIs improved in January although they remain both in contractionary territory.
- The market expects the first rate cut in June.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD bounced around the support level at 1.3541 as the buyers stepped in to position for a break above the 1.3619 level and target the highs around the 1.38 handle. The sellers, on the other hand, will want to see the price breaking below the trendline to invalidate the bullish setup and position for a drop into the 1.3360 level.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely how the price bounced on the 1.3541 resistance turned support where we had also the 50% Fibonacci retracement level for confluence, and continued higher as new buyers stepped in with a defined risk below the trendline. We should find the sellers piling in around the 1.3619 level to position for a break below the trendline with a better risk to reward setup, but ultimately, we will need a break below the trendline to turn the trend around.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the recent price action has been rangebound as the market consolidated before the next move. We might form a range here between the 1.3541 support and the 1.3619 resistance, so a break on either side should lead to a big and sustained move.
Upcoming Events
This week we have lots of important events on the agenda with the release of the US labour market data and the Fed Chair Powell testifying to Congress. We begin today with the US ISM Services PMI. Tomorrow, we have a busy day with the BoC rate decision, the US ADP, the US Job Openings and the Fed Chair Powell speaking. On Thursday, we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US NFP and the Canadian Jobs data.
