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 US PCE came in line with expectations.
  • 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

USDCAD Technical Analysis
USDCAD Daily

On the daily chart, we can see that USDCAD bounced near the key support zone around the 1.3620 level where had also the 61.8% Fibonacci retracement level for confluence. If we get another push to the downside, we can expect the buyers to step in at the support with a defined risk below it to position for a rally into the 1.39 handle. Alternatively, if the price were to continue lower, we can expect the buyers to lean on the major trendline. The sellers, on the other hand, will look to pile in at every break lower to keep targeting the 1.3225 level.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that the price is at a key resistance zone around the 1.37 handle where we can find the confluence of the downward trendline and the 61.8% Fibonacci retracement level. This is where we can expect the sellers to step in with a defined risk above the Fibonacci level to position for a break below the 1.3620 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to pile in and position for a rally into the 1.39 handle.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see that the price recently diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the downward trendline and the Fibonacci resistance, but if the price continues higher, the next target would stand around the 1.3731 high where a further breakout would open the door for a rally into the 1.39 handle.

Upcoming Events

Today, we have the US Q1 Employment Cost Index and the Consumer Confidence report. Tomorrow, we get the US ADP, the ISM Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.