USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The recent US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but this week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- The market doesn’t expect the Fed to hike anymore.
CAD
- The BoC left interest rates at 5.00% as expected but remains prepared to raise rates further if needed.
- BoC Governor Macklem delivered a less hawkish speech in the press conference compared to his previous remarks.
- The recent Canadian CPI missed expectations across the board and the underlying inflation measures eased, which was a welcome development for the BoC.
- On the labour market side, the latest report missed expectations across the board with negative figures in full-time employment and a slowing wage growth, which is going to be another positive outcome for the central bank.
- The market doesn’t expect the BoC to hike anymore.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD bounced just before reaching the key trendline around the 1.3630 level. The Canadian Dollar has been under some pressure probably for the selloff in the Oil market. We are likely to see more rangebound price action going forward as the market will try to find a new direction amid weakening US and Canadian data. Watch out for breakouts as we have a key trendline and a key resistance at 1.3862.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that there’s no clear trend and therefore no clear level the market participants can lean on to. After the yesterday’s spike following the miss in the US Jobless Claims data though, we can expect a pullback. It’s also interesting to see that this time weaker US data led to Dollar strength. The focus might be switching to the recession and the US Dollar is generally supported as safe haven.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the buyers can lean on the upward minor trendline where we have also the confluence with the 50% Fibonacci retracement level. Alternatively, if the price breaks the recent high, we can expect the buyers to increase the bullish bets into the 1.3862 resistance. The sellers, on the other hand, will want to see the price breaking below the minor trendline to position for a drop into the major one at 1.3630.
Upcoming Events
Today the only economic report on the agenda is the Canadian PPI which is unlikely to be market moving.
