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.
  • Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • There’s now basically a 50/50 chance of a rate cut in June.

CAD

  • The BoC left interest rates unchanged at 5.00% as expected at the last meeting stating that further easing in underlying inflation is needed.
  • The latest Canadian CPI missed expectations across the board with the underlying inflation measures falling.
  • 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

USDCAD Technical Analysis
USDCAD Daily

On the daily chart, we can see that USDCAD rejected the key 1.3620 resistance last Friday despite a strong US NFP report and weak Canadian jobs figures. The sellers keep stepping in around these levels to position for a drop back into the lower bound of the rising channel. The buyers will want to see the price breaking higher to increase the bullish bets into the 1.38 handle.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that the pair remains stuck in the range between the 1.3450 support and the 1.3620 resistance, although the pair continues to print higher lows indicating a bullish bias. There’s not much else we can glean from this chart, so we need to zoom in to see some more details.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see that the recent price action formed what looks like a descending triangle with the 1.3575 support zone and the black trendline. The price can break on either side of the pattern, but what follows next is generally a strong push in the direction of the breakout. The buyers will want to see the price breaking higher to position for a break above the key resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the lower bound of the channel.

Upcoming Events

Tomorrow we get the US CPI report, the BoC Rate Decision and the FOMC Minutes. On Thursday, we will have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment Survey.