USD

• The Fed left interest rates unchanged as
  expected at the last meeting while dropping the tightening bias in the
  statement but adding a slight pushback against a March rate cut.
• The US CPI beat
  expectations for the second consecutive month with the disinflationary trend
  reversing.
• The US PPI beat
  expectations across the board by a big margin.
• The US Jobless Claims beat
  expectations with the data remaining steady.
• The latest US PMIs
  increased further from the prior month with the Manufacturing PMI beating
  expectations and the Services PMI missing.
• 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 missed expectations across the
  board with the underlying inflation measures falling, which will be a welcome
  development for the BoC.
• 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 is still
consolidating around the key trendline as the
weak divergence between the two central banks is keeping the pair in a tight
range. Nonetheless, the current technical break could trigger a bigger move, so
the sellers might start to position for a drop into the 1.3360 level.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
broke above the downward trendline yesterday before erasing most of the move
and ending the day lower. Today the move extended to the downside, and we are
now seeing a breakout. It might be another fakeout, but this is where we can
expect the sellers to step in to target a drop into the 1.3360 level. The
buyers, on the other hand, will want to see the price bouncing back above the
trendline before piling in and target the 1.3620 level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action and the breakout. The first target for the
sellers should be the support zone
around the 1.3460 level. That will be the last line of defence for the buyers
as a break lower will likely trigger a selloff to the 1.3360 level.

Upcoming Events

This week we have some important economic data on the
agenda. We begin today with the release of the US Consumer Confidence report.
On Thursday, we will see the US PCE and the latest US Jobless Claims figures.
Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI.

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