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 latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent 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 last 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 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 is now consolidating between the key 1.3860 resistance and the major trendline. The price action has been messy lately with no clear direction, so the market participants might want to wait for the price to react to the key levels before opening new positions.
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. The buyers are likely to wait for the price to come into the major trendline to position for a rally into the 1.3860 resistance and target a break above it. The sellers, on the other hand, will be both leaning on the resistance and increase the bearish bets in case the price breaks below the major trendline.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that on this timeframe we have some interesting levels where the price reacted to multiple times. In fact, we can expect more buyers to come into the market if the price breaks above the 1.3750 resistance to target the key 1.3860 level. Conversely, if the price breaks below the support around the 1.37 handle, the sellers are likely to pile in to target the major trendline and increase the bearish bets if the price falls below the trendline.
Upcoming Events
This week is pretty empty on the data front with the US on holiday for Thanksgiving Day in the final part of the week. Today, we have the Canadian CPI which is not expected to change much for the BoC given the softening labour market, and then later in the day we will get the FOMC Meeting Minutes. Tomorrow, we have the US Jobless Claims report which is probably going to be the most important release of the week. On Friday, we conclude the week with the latest US PMIs.
