USD
- The Fed left interest rates unchanged as
expected while dropping the tightening bias in the statement but adding a
slight pushback against a March rate
cut. - Fed Chair Powell stressed
that they want to see more evidence of inflation falling back to target and
that a rate cut in March is not their base case. - The US CPI beat
expectations for the second consecutive month with the disinflationary trend
reversing. - The US Initial Claims beat
expectations while Continuing Claims missed. Overall, the data remains steady. - The ISM Manufacturing
PMI
surprised to the upside with the new orders index, which is considered a
leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat
expectations across the board with the employment sub-index erasing the prior
drop and prices paid jumping above 60. - The US Retail Sales missed
expectations across the board by a big margin. - The market now expects the first rate cut in June.
CAD
- The BoC left interest rates unchanged at
5.00% as expected and dropped the language about being prepared to hike if
needed. - The latest Canadian CPI beat expectations across the board with
the underlying inflation measures remaining elevated. - On the labour market side, the latest report beat
expectations but we saw a contraction in full-time employment and a fall in
wage growth. - 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 recently
broke out of the 1.3540 resistance
following the hot US CPI report but failed to sustain the rally as the pair
eventually erased all the gains. The price though made a new higher high so we
have a trendline now
where the buyers will likely step in with a defined risk below it to position
for a rally into the 1.3620 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 1.3364 level.
USDCAD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see more closely the
pop and fade after the US CPI release. There’s not much to do here other than
waiting for the price to reach the trendline where the buyers will look for a
reversal and the sellers for a breakout.
USDCAD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that if we
get a pullback from here, the sellers will likely lean on the downward
trendline where they will also find the confluence with
the 61.8% Fibonacci
retracement level. The buyers, on the other hand,
will want to see the price breaking higher to pile in and target a new high.
Upcoming Events
Today we get the US PPI data and the University of
Michigan Consumer Sentiment survey.
This article was written by FL Contributors at www.forexlive.com. Source