USD
- The Fed left interest rates unchanged as expected 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.
- Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
- The US CPI and the US PPI beat expectations for the second consecutive month.
- The US Jobless Claims beat expectations across the board.
- The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though.
- 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 fall in wage growth which is something that the BoC is watching closely.
- 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 managed to reach the key 1.3620 level where the sellers stepped in with a defined risk above the level to position for a drop into the 1.3360 level. We got a strong push lower following the Fed decision, but the move got erased almost entirely the day after with the price now coming back to the 1.3620 level. The buyers will want to see the price breaking that level to increase the bullish bets into the 1.38 handle.
USDCAD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is now stuck in a range between the 1.3620 resistance and the 1.3450 support. Market participants will likely “play the range” by selling at resistance and buying at support until we get a breakout supported by a fundamental catalyst. There’s not much else we can glean from this timeframe, so we need to zoom in to see some more details.
USDCAD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor trendline defining the current uptrend with the confluence of the red 21 moving average. If we get a pullback into the trendline, we can expect the buyers to step in with a defined risk below it to position for a rally into the resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and increase the bearish bets into the support.
Upcoming Events
Today we conclude the week with the Canadian Retail Sales data.
