US

• The Fed left interest rates unchanged as
  expected with basically no change to the statement.
• Fed Chair Powell stressed
  once again that they are proceeding carefully as the full effects of policy
  tightening have yet to be felt.
• The recent US Core PCE came
  in line with expectations.
• The labour market is
  starting to show some weakness as Continuing Claims are now
  rising at a fast pace and the NFP data
  last Friday missed across the board.
• The US Consumer
  Confidence fell for the third consecutive month
  although the data beat expectations.
• The US ISM
  Manufacturing PMI last week missed expectations by a big
  margin, followed later on Friday with a disappointing ISM Services PMI,
  although the index remained in expansion.
• 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 less hawkish speech in
  the press conference compared to his previous remarks.
• The recent Canadian CPI missed expectations across the
  board and the underlying inflation measures eased, which was a welcome
  development for the BoC.
• On the labour market side, the latest report missed expectations
  across the board with negative figures in full-time employment and a slowing
  wage growth, which is going to be another positive outcome for the central
  bank.
• The market doesn’t expect the BoC to
  hike anymore.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the USDCAD broke
decisively below the upward trendline and
extended the selloff following the disappointing NFP data. The pair bounced
yesterday on the 50% Fibonacci retracement level
and it’s now approaching the broken trendline. Will we get a classic “break and
retest” pattern? From a risk management perspective, the buyers would have an
even better risk to reward setup around the major blue trendline.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price is
now getting closer to a strong resistance around
the 1.3740 level where we can find the 38.2% Fibonacci retracement level and
the red 21 moving average for confluence. This is
where the sellers are likely to step in again with a defined risk above
resistance to position for a drop into the major blue trendline.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
current bullish momentum is defined by the upward minor trendline. More
conservative sellers may want to see the price breaking below the trendline
before piling in and position for a drop into the major trendline. The buyers,
on the other hand, will want to see the price breaking higher to increase the
bullish bets into the broken trendline where the sellers will go for another
try.

Upcoming Events

This week is pretty empty on the data front with just
the US Jobless Claims on Thursday and the University of Michigan Consumer
Sentiment on Friday. The market is likely to focus on the US Jobless Claims on
Thursday given the recent weakness in the labour market data.

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