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.
  • 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 yesterday missed expectations slightly although Continuing Claims improved.
  • 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 Consumer Confidence missed expectations although the labour market details improved.
  • The market still expects the first cut in June but the probability stands at just 60%.

CAD

  • The BoC left interest rates unchanged at 5.00% as expected at the last meeting 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 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

USDCAD Technical Analysis
USDCAD Daily

On the daily chart, we can see that USDCAD bounced yesterday near the lower bound of the channel as we got a strong bid in the US Dollar caused by risk off flows following the news of possible Israel-Iran conflict. The buyers should now be looking again at the 1.3620 resistance targeting a break above it. If the price gets there though, the sellers will likely step in with a defined risk above the resistance to position for another drop into the lower bound of the channel.

USDCAD Technical Analysis – 4 hour Timeframe

USDCAD Technical Analysis
USDCAD 4 hour

On the 4 hour chart, we can see that the pair remains stuck in the range between the 1.3450 support and the 1.3620 resistance, although the pair continues to print higher lows indicating a bullish bias. With the latest leg lower we can now draw a trendline connecting the most recent swing highs and we can see that the price is reacting to it as the sellers are probably stepping in to position for a drop back into the lower bound of the channel targeting a break below it. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the resistance targeting a breakout.

USDCAD Technical Analysis – 1 hour Timeframe

USDCAD Technical Analysis
USDCAD 1 hour

On the 1 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the 1.3540 level where we can find the confluence of the most recent swing low, the red 21 moving average and the 38.2% Fibonacci retracement level. 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 lower bound of the channel.

Upcoming Events

Today we conclude the week with the Canadian Jobs data and the US NFP report.