US:
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
- The US CPI beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains pretty resilient as seen once again last week with the beat inJobless Claims, although continuing claims missed for a second time in a row.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains resilient.
- Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady in November as well.
- 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 hawkish speech which points to another rate hike if the underlying inflation data remains elevated.
- The Canadian CPI last week missed across the board and the underlying inflation measures eased, which decreased the risk of another rate hike from the BoC.
- On the labour market side, the recent report beat expectations and showed another uptick in wage growth, which is something that Governor Macklem said the BoC is watching carefully.
- The market doesn’t expect the BoC to hike at the upcoming meeting.
USDCAD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDCAD pair maintains a bullish bias although the recent correction became harder to interpret. The buyers are likely to lean on the red 21 moving average and keep targeting the 1.3862 high, but from a risk management perspective, they will have an even better setup if the price was to pull back all the way down to the trendline.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the USDCAD pair is trading within a rising channel and the price is near the lower bound of the channel. This is where we have a strong confluence with the 61.8% Fibonacci retracement level, the lower bound of the channel and the daily red 21 moving average. The buyers should step in here with a defined risk below the channel to position for a rally into the 1.3862 high. The sellers, on the other hand, will want to see the price breaking lower to pile in and target the major trendline.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bullish setup around the 1.3660 level. The price has bounced on the 61.8% Fibonacci retracement level as the buyers stepped in. A break above the recent swing low level around the 1.37 handle is likely to trigger a stronger move to the upside as the buyers will increase the bullish bets.
Upcoming Events
Today we will get the latest US PMIs where strong figures should support the greenback, while weak readings are a bit more complicated as the USD might weaken due to falling Treasury yields but also strengthen due to recessionary fears. On Thursday, we will see the US Jobless Claims figures, while on Friday we get the US PCE report which is not expected to change anything for the Fed at this time.
