The Fed hiked interest rates by 25 bps as expected and kept everything
else unchanged. Fed Chair Powell just reaffirmed their data dependency and kept
all the options on the table. The economic data since the FOMC meeting has been
supporting the soft-landing narrative as the labour market data remains strong
and the inflation data keeps missing expectations.
On the other hand, the BoC hiked rates by 25 bps as expected at the last meeting as
the central bank doesn’t like the persistently high underlying inflation with a
tight labour market. In the recently released Meeting Minutes the BoC seems less in a rush to
hike rates again. The recent Canadian underlying inflation data beat expectations on all
measures, but the Canadian Retail Sales missed across the board. Overall,
it’s a mixed picture for the BoC and it puts them in a tough position.
USDCAD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that USDCAD has
finally broke above the 1.3225 resistance with
conviction and rallied to the next resistance at 1.33. The buyers will need the
price to break this resistance with conviction to pile in even more and extend
the rally towards the 1.34 handle.
USDCAD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that we had
recently a failed breakout of the resistance that led to a quick selloff into
the trendline and the
previous swing low. The buyers though stepped in with an even better risk to
reward setup and eventually managed to get the breakout.
USDCAD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price has recently rejected the 1.33 resistance and pulled back into the 1.3260
support where we had also the red 21 moving average for confluence. We
are starting to see a divergence with
the MACD
though, which is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, if we do get a pullback, the buyers are likely
to lean on the 1.3260 support again to target the 1.34 handle. The sellers, on
the other hand, will need the price to break below the support to pile in and
target new lows.
Upcoming Events
Today
we have the US ADP report which is generally a less reliable indicator of the
labour market, but it can nonetheless move the market. Tomorrow, the market
will focus on the US Jobless Claims and the ISM Services PMI data. On Friday,
all eyes will be on the US NFP report. Strong data should give the USD a boost,
while weak readings should weigh on the greenback.
This article was written by FL Contributors at www.forexlive.com. Source