USD
- The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
- The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
- The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
- The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
- The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
- The market now expects the first rate cut in September.
CAD
- The BoC left interest rates unchanged at 5.00% as expected changing a line in the statement that indicated less concern about inflation and thus the possibility of a cut in June if the trend remains intact.
- The latest Canadian CPI came in line with expectations although the underlying inflation measures eased further.
- On the labour market side, the latest report missed expectations across the board although we saw an uptick in wage growth which is something that the BoC is watching closely.
- The Canadian Manufacturing PMI improved slightly in March while the Services PMI weakened further. Both the measures remain 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 came close to the top of the one-year range around the 1.3862 level but eventually rolled off back into the 1.37 handle. We can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the 1.3620 level where we can find the confluence of the previous resistance turned support and the 61.8% Fibonacci retracement level. The sellers, on the other hand, will want to see the price breaking below the major trendline to turn the trend around and target a drop all the way back to the bottom of the range around the 1.3225 level.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price yesterday broke below the minor upward trendline turning the bias more bearish and opening the door for a drop into the 1.3620 support. We now have a minor downward trendline and the red 21 moving average defining the current bearish momentum. This is where we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 1.3620 support with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into new highs.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have also the Fibonacci retracement levels on this timeframe adding some extra confluence to the bearish setup around the trendline. Watch out for the US Flash PMIs data today because it will be a market moving event.
Upcoming Events
Today we get the US Flash PMIs. Tomorrow, we have the Canadian Retail Sales. On Thursday we will see the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE report.