USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement.
  • Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
  • The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
  • The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board, but yesterday the US Jobless Claims beat forecasts giving the USD a short-term boost.
  • The latest US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
  • The recent US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
  • The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
  • The market doesn’t expect the Fed to hike anymore.

CAD

  • The BoC left interest rates at 5.00% as expected at the last meeting but remains prepared to raise rates further if needed.
  • BoC Governor Macklem delivered a less hawkish speech in the press conference compared to his previous remarks.
  • The recent Canadian CPI missed expectations across the board and the underlying inflation measures eased, which was a welcome development for the BoC.
  • On the labour market side, the latest report missed expectations across the board with negative figures in full-time employment and slowing wage growth, which is going to be another positive outcome for the central bank.
  • The market doesn’t expect the BoC to hike anymore.

USDCAD Technical Analysis – Daily Timeframe

USDCAD Technical Analysis
USDCAD Daily

On the daily chart, we can see that USDCAD has finally reached the key trendline around the 1.3650 level. This is where we can expect the buyers to step in more aggressively with a defined risk below the trendline to position for a rally back into the highs and eyeing a break to the upside. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.34 handle.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that we have some key support and resistance zones. The buyers should pile in at the support zone around the 1.3650 level with a defined risk below it. If we see a bounce, the sellers will lean on the resistance zone around the 1.3750 level where we will also find the downward trendline for confluence.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see more closely the bullish setup around the major trendline and the support zone at 1.3650. A break below this zone should invalidate the bullish setup and increase the bearish momentum into the 1.34 handle. On the other hand, a break above the resistance zone and the trendline should increase the bullish momentum as the buyers will add even more to their upside bets and the sellers will likely fold.

Upcoming Events

Today the US will be on holiday for Thanksgiving Day and therefore the liquidity in the market will be thinner. Tomorrow, we conclude the week with the Canadian Retail Sales and the US PMIs.