USD
- The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
- The US PCE came in line with expectations.
- The US ADP and the US Job Openings missed expectations, followed by weaker than expected US Jobless Claims.
- The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
- The US Consumer Confidence missed expectations across the board.
- The market expects the first rate cut in June.
CAD
- The BoC left interest rates unchanged at 5.00% as expected 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 beat expectations but we saw a contraction in full-time employment and a fall in wage growth.
- The Canadian PMIs improved in January although they remain both in contractionary territory.
- The market expects the first rate cut in June.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCAD broke below the key trendline and triggered a strong selloff as the sellers piled in to position for a drop into the 1.3360 level. That’s also where we should find the buyers stepping in to position for a rally back to the highs with a better risk to reward setup.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a clear swing level around at the 1.3442 level where we might see a bounce with the buyers stepping in with a defined risk below the level to position for a rally back to the highs. The sellers, on the other hand, might want to wait for the price to pull back into the 38.2% Fibonacci retracement level to position for new lows with a better risk to reward setup.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal for a pullback into the resistance around the 1.35 handle.
Upcoming Events
Today we conclude the week with the US NFP and the Canadian Jobs data.
