Fundamental Overview
The US Dollar has been gaining ground across the board this week despite the lack of economic data and lower Treasury yields, essentially moving forward by inertia.
Stanley Druckenmiller said in an interview yesterday that the market is already positioning for a Trump victory given the moves in some stocks like DJT for example.
That could explain the recent USD strength as it should appreciate on higher growth and less rate cuts expectations. Nevertheless, not all markets have been in sync with this view, so it could be just noise.
For now, we can only work with data and today we get the US retail sales and jobless claims figures which will likely be market moving. The key events though will be in November when we get the October data and the US election.
On the CAD side, the latest Canadian CPI missed expectations and sealed the 50 bps cut at the upcoming meeting with the market seeing now a 73% probability from 48% before the inflation report.
The Loonie appreciated following the data release although that might have had to do more with a “sell the fact” reaction as the market priced in already a very aggressive rate cuts path for the BoC.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD fell below the key 1.3785 level following the Canadian CPI report. The sellers will likely keep on stepping in around this level to position for a drop into the 1.36 support, while the buyers will look for a break higher to increase the bullish bets into the 1.39 handle next.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the steep trendline that was defining the strong bullish momentum. The sellers piled in on the break to position for new lows and the price is now testing again the 1.3785 level. The buyers will want to see the price breaking higher to start targeting new highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the resistance zone around the 1.3785 level. There’s not much else to add here as the buyers will look for a break higher, while the sellers will step in for a move lower. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Retail Sales and US Jobless Claims data.