USD

  • The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably. Moreover, the US Jobless Claims yesterday beat expectations across the board with a big positive revision to Continuing Claims.
  • The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
  • The US Retail Sales missed expectations across the board although the data improved from the prior month.
  • 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

USDCAD Technical Analysis
USDCAD Daily

On the daily chart, we can see that USDCAD pulled back into a key resistance level at 1.3540 following the strong US data release. This is where we can expect the sellers to step in with a defined risk above the level to position for a drop into the 1.3360 level. 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 the 1.3620 level.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that we can also find the 61.8% Fibonacci retracement level around the resistance level for confluence. We can also notice that the price is 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.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see more closely the recent price action and we can see that around the 4-hour 8 moving average we have a support zone on this timeframe with the 38.2% Fibonacci retracement level for confluence. If the price falls from the resistance, we can expect the buyers to step in around the support with a defined risk below it to position for a break above the 1.3540 resistance with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.

Upcoming Events

Today we conclude the week with the US Industrial Production data and the University of Michigan Consumer Sentiment survey.