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 missed expectations across the board with the underlying inflation measures falling.
- 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 broke through the key 1.3620 resistance following another hot US CPI report and extended the rally into the 1.38 handle. The price got a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. In this case, a pullback would also coincide with the 38.2% Fibonacci retracement level where the buyers will likely step in to position for a rally into a new cycle high.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor trendline defining the current upward momentum with the red 21 moving average adding some extra support. The buyers will likely lean on the trendline to position for another rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to position for a drop into the next trendline around the 1.3660 level where there will also be the 38.2% Fibonacci retracement level adding extra support.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has been diverging with the MACD, which is generally a sign of a weakening momentum often followed by pullbacks or reversals. In this case, it could be a signal for a pullback into the minor trendline where we can also find the 61.8% Fibonacci retracement level for confluence. A break to the downside would confirm a reversal though and trigger a drop into the base of the divergent formation around the 1.3660 level.
Upcoming Events
Today we will see the Canadian CPI, while on Thursday we get the latest US Jobless Claims figures.
