US:
- The Fed hiked by 25 bps as
expected and kept everything unchanged. - Fed Chair Powell reaffirmed their data dependency
and kept all the options on the table. - The US economic data keeps on surprising to the
upside, but inflation expectations and CPI readings continue to show
disinflation with the last two Core CPI M/M figures
coming in at 0.16%. - At the moment, the market doesn’t expect another
hike from the Fed, but the next NFP and CPI data will be crucial to confirm or
change this view.
Canada:
- 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 Canadian underlying inflation
data beat expectations on all measures for the June readings and last week we
got another beat for the July data. - On the labour market side, the last
report showed that the unemployment rate increased once again, but the average hourly earnings surprised to the upside as well. - Overall, it’s a mixed picture for
the BoC but it should be more skewed to the hawkish side.
USDCAD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that USDCAD broke
above the key downward trendline and
extended the rally into the 1.3553 resistance. The
price has been struggling to break above the resistance and the pair started to
consolidate just beneath the level. We will likely need a catalyst to push the
price above the resistance and cause another rally.
USDCAD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price has
been diverging with the
MACD for a
while. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, we saw many pullbacks along the way, and
we will likely see another one into the black trendline where we can also find
the confluence with the
previous resistance now turned support and the
38.2% Fibonacci retracement level.
This is where the buyers are likely to pile in with a defined risk below the
trendline to target a breakout of the 1.3553 resistance.
USDCAD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that we
are basically stuck in a range now between the 1.3553 resistance and the 1.3500
support. A break on either side should lead to a quick move as the momentum is
likely to pick up.
Upcoming Events
This week is
pretty empty on the economic data side as we will only have the PMIs tomorrow
and the US Jobless Claims on Thursday. Given the strong appreciation in the US
Dollar seen in the past weeks, we can expect some USD weakness if the data
misses expectations, and we will likely need much stronger than expected
readings to see another sustained rally in the greenback. Remember also that
this is the Jackson Hole Symposium week, so we will hear from many central
bankers including Fed Chair Powell, who is set to speak on Friday.
This article was written by FL Contributors at www.forexlive.com. Source