Fundamental
Overview
The US CPI yesterday missed expectations across the board
but the details that feed into the Core PCE were less encouraging with early
estimates increasing. The price action in the USD has been mixed following the
data release as the markets are likely waiting for the US PPI today to get
better estimates for the PCE.
On the CAD side, the BoC cut interest rates by 25 basis points to 2.75% as
expected amid concerns over weaker growth ahead due to the trade uncertainty
and US tariffs. The central bank emphasized a cautious approach to future
decisions, balancing the upward pressure on inflation against the downward
pressure on weaker demand.
Governor Tiff Macklem acknowledged the economic uncertainty, and he warned
that a prolonged trade war could slow GDP growth, weaken the job market, and
push inflation higher, creating a difficult policy environment. The market sees
a 97% chance of another 25 bps cut at the upcoming meeting and a total of 53
bps of easing by year-end.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD continues to mostly range between the 1.42 and 1.45 levels as
the uncertainty around tariffs remains high. There’s not much we can glean from
this timeframe, so we need to zoom in to see some more details.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the price dropped back to the key 1.4365 level which has been acting
as kind of a barometer for the sentiment. This is where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the 1.4245 level next.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we have a minor downward trendline defining the bearish momentum on
this timeframe. The sellers will likely lean on the trendline to keep pushing
into the 1.4245 level, while the buyers will look for a break higher to
increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US PPI data and the US
Jobless Claims figures. Tomorrow, we conclude the week with the University of
Michigan Consumer Sentiment report.