US:
- ·The Fed left interest rates unchanged as expected.
- The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
- The latest US CPI came in line with expectations with the Core measure continuing to show disinflation.
- The labour market displayed signs of softening although it remains fairly solid as seen also yesterday with another beat in Jobless Claims.
- The US Consumer Confidence this week missed expectations although the jobs details were positive.
- The market doesn’t expect the Fed to hike again at the moment.
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 hawkish speech which points to another rate hike if the data remains strong into the next policy meeting.
- The Canadian underlying inflation data has been beating expectations month after month and last week we got another beat across the board.
- On the labour market side, the recent report showed another uptick in wage growth and this is something that Governor Macklem said the BoC is watching carefully.
- There’s now basically a 50/50 chance that the BoC hikes at the next meeting.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDCAD bounced on the strong support around the 1.34 handle where we had also the 50% Fibonacci retracement level. The pair pulled back into the red 21 moving average and the 50% Fibonacci retracement level of the entire bearish leg where it found strong sellers. It’s starting to look like the pair is set for another bearish move as we already got a new lower low when the price fell below the 1.3489 level and the moving averages are crossed to the downside.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price broke below the counter-trendline and the sellers piled in to target the 1.34 support zone. We can expect the buyers to step in again at the support with a defined risk below it to target again the highs, but for now the bias remains bearish.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that on this timeframe the trend is now bearish as the price is printing lower lows and lower highs and the moving averages are crossed to the downside. If we get a pullback, the sellers should lean on the previous swing low around the 1.3470 level where there’s confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. On the upside, the buyers will want to see the price breaking above the downward trendline to position for a rally into the highs.
Upcoming Events
Today the only notable release will be the US PCE report. The data is unlikely to change anything for the market unless we get some big surprises.
