US
- 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 Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims yesterday showed another increase and the NFP data last Friday missed across the board.
- The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
- The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
- The market doesn’t expect the Fed to hike anymore.
Canada
- 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 the USDCAD pair reversed most of the losses seen after the less hawkish than expected FOMC and the disappointing US labour market data. The price bounced on the 50% Fibonacci retracement level and it’s now hovering around the broken trendline. This might turn into a “break and retest” pattern, so the sellers are likely to step in around these level to position for a drop into the major upward trendline.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we had a strong resistance around the 1.3730 level where there was the confluence with the red 21 moving average and the 38.2% Fibonacci retracement level. The price managed to break decisively above the resistance and the buyers increased the bullish bets into the highs. We then got a pullback into the red 21 moving average where the buyers stepped in once again as the bullish momentum remained intact.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price got rejected from the recent swing high at 1.3814. We should now have two key short-term levels: the resistance at 1.3814 and the support at 1.3730. If the price breaks to the upside, the buyers should continue to maintain control and take the pair into new highs. On the other hand, if the price breaks below the support, the sellers should pile in with more conviction and target the major trendline around the 1.36 handle.
Upcoming Events
Today the only market moving event will be the release of the University of Michigan Consumer Sentiment report.
