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 latest US GDP beat
  expectations by a big margin.
• The US PCE came
  mostly in line with expectations with the Core 3-month and 6-month annualised
  rates falling below the Fed’s 2% target.
• The US NFP report
  beat expectations across the board by a big margin.
• 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 Consumer
  Confidence report came in line with expectations but
  the labour market details improved considerably.
• The market now expects the first rate cut in May.

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, which should give the BoC
  a reason to wait for more data before considering rate cuts.
• On the labour market side, the latest report missed
  expectations although wage growth spiked to the highest level since 2021.
• The Canadian PMIs improved in
  January although they remain both in contractionary territory.
• The market expects the BoC to start
  cutting rates in May.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD bounced
on the 50% Fibonacci retracement level
and rallied all the way up to the recent high following the strong US NFP
report. The sellers stepped in around the high with a defined risk above it to
position for a drop into new lows. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the next resistance at
1.3620.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have a better risk to reward setup
around the 1.3460 level where we can find the confluence with the
50% Fibonacci retracement level and the 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the
support zone to increase the bearish bets into the 1.3360 level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is now right at the resistance. It will be interesting to see what
happens here in the US session as a break above the level should see the rally extending
to new highs while a strong rejection is likely to take us back to the 1.3460
level.

Upcoming Events

This week is basically empty on the data front with just
a couple of key economic releases on the agenda. On Thursday, we will see the
latest US Jobless Claims figures while on Friday we get the Canadian labour
market report.

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