USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- The US Q1 GDP surprisingly missed expectations although the core components showed a strong economy, nonetheless. The Core PCE though surprised to the upside pushing rate cuts further away.
- The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US PMIs missed expectations in April with the commentary citing lower inflationary pressures but also increased layoffs.
- The market expects the first rate cut in September.
CAD
- The BoC left interest rates unchanged at 5.00% as expected changing a line in the statement that indicated less concern about inflation and thus the possibility of a cut in June if the trend remains intact.
- The latest Canadian CPI came in line with expectations although the underlying inflation measures eased further.
- On the labour market side, the latest report missed expectations across the board although we saw an uptick in wage growth which is something that the BoC is watching closely.
- The Canadian Manufacturing PMI improved slightly in March while the Services PMI weakened further. Both the measures remain 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 is getting closer and closer to the key support zone around the 1.3620 level where we can also find the 61.8% Fibonacci retracement level for confluence. That will be the first opportunity for the buyers followed by the second one around the major trendline if the price were to break below the 1.3620 support. The sellers, on the other hand, will keep pushing at every break lower, and in case they manage to break below the trendline, the next target will be the 1.3225 low.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price yesterday got rejected from the minor downward trendline as the sellers stepped in to increase the bearish bets into new lows. The buyers will need to break above the minor trendline and the 1.3730 resistance zone to turn the trend around and start targeting new highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance zone around the 1.3665 level where there’s also the red 21 moving average for confluence. This is where we can expect the sellers to step in again with a defined risk above the resistance to increase the bearish bets into new lows. The buyers, on the other hand, will want to see the price breaking higher to position for a rally into the trendline and targeting a break above it.
Upcoming Events
Today we conclude the week with the US PCE report.
