Fundamental
Overview
The USD last week came
under some more pressure as a series of soft US data pushed Treasury yields
lower. The NFP report on Friday wasn’t bad though, on the
contrary, the data under the hood was better than the prior month. That helped
the greenback to erase the weekly losses.
Nevertheless, the trend in
the labour market continues to remain skewed to the downside and time will tell
if the Fed’s cuts will be enough to stop this trend.
The probabilities for the
Fed to cut by 50 bps at the upcoming meeting dropped to 27% following the NFP
report with a total of 110 bps of easing expected by year-end. For the BoC, the
market sees a 99% probability of no change at the upcoming meeting and a total
of 58 bps of easing by year-end.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD is approaching the key resistance around the 1.36 handle. That’s
where we can expect the sellers to step in with a defined risk above the resistance
to position for a drop back into the 1.34 handle. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the 1.38 handle next.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the pair is now trading between two key levels: the 1.34 support and
the 1.36 resistance. There’s not much else we can glean from this timeframe as
the sellers would be better off leaning on the resistance, while the buyers
will have a stronger confirmation for more upside on a break above the resistance.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we got a spike to the downside on the NFP release and then a rally as
the market digested the better than feared details. A break above the recent
high at 1.3582 should increase the buying pressure into the 1.36 resistance
zone.
The buyers will also have
an opportunity to buy the dip on a drop into the 1.3530 zone, while the sellers
will look for a break to the downside to position for a fall into the 1.34
handle. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the US Small Business Optimism Index. On Wednesday, we get the
US CPI report. On Thursday, we have the latest US Jobless Claims figures and
the US PPI data. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment report.