US:

• The Fed left interest rates unchanged as
  expected at the last meeting.
• The macroeconomic projections were revised higher,
  and the Dot Plot showed that the FOMC still expects another rate hike by the
  end of the year with less rate cuts in 2024.
• Fed Chair Powell
  reaffirmed their data dependency but added that they will proceed carefully.
• The US CPI
  yesterday beat expectations on the headline figures, but the core measures came
  in line with forecasts and the market’s pricing barely changed.
• The labour market remains
  fairly solid as seen last week with the NFP report
  and yesterday’s Jobless Claims.
• The ISM Manufacturing PMI beat
  expectations while the ISM Services PMI came in
  line with forecasts in another sign that the US economy remains resilient.
• The Fed members continue to cite elevated long-term
  yields as a reason to proceed carefully and likely pause in November as well.
• The market doesn’t expect the Fed to hike anymore.

Canada:

• The BoC left interest rates at 5.00% as expected but remains prepared to
  raise rates further if needed.
• BoC Governor Macklem delivered a hawkish speech which points to another rate hike
  if the data remains strong into the next policy meeting.
• The Canadian underlying inflation
  data has been beating expectations month after month with another beat across the board recently.
• On the labour market side, the recent
  report beat expectations and showed another uptick in wage growth, which is something that Governor
  Macklem said the BoC is watching carefully.
• The market doesn’t expect the BoC to
  hike at the upcoming meeting with odds hovering around 40%, but the central
  bank is not afraid to deliver surprising decisions.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD pair
pulled back into the red 21 moving average where it
bounced and then rallied strongly following the release of the US CPI report.
Yesterday’s reaction though was a bit perplexing as market’s pricing on
interest rates expectations hasn’t changed. We will see in the next few days if
the market continues on this direction or fades completely the CPI reaction.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price got
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. The sellers might step in around the
61.8% Fibonacci retracement level to
position for a drop into the major trendline around
the 1.35 handle. The buyers, on the other hand, are likely to pile in at the
blue 8 moving average, although they will have a better risk to reward setup
around the 1.3620 support.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
support around the 1.3620 level has the confluence from
the previous resistance now turned
support, the 61.8% Fibonacci retracement level and the 4-hour
red 21 moving average. This is going to be a nice level for the buyers to lean
on with a defined risk below it to position for a rally into the 1.3862 level.
The sellers, on the other hand, will want to see the price breaking below the
support to increase the bearish bets into the 1.35 handle.

Upcoming Events

Today the only notable event on the agenda is the
University of Michigan Consumer Sentiment report although it has lost its
market moving ability lately. Only big surprises are likely to have an impact
on the market.

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