Fundamental
Overview
The USD rallied across the
board last Friday following the hot US NFP report. The market priced out all the
aggressive expectations and it’s now finally in line with the Fed’s
projections.
The focus remains on the
economic data. The next key event to watch will be the US CPI report on
Thursday. We will likely need a hot report to see a strong rally, while a big
miss could see the market price back in a more aggressive path for rate cuts.
On the CAD side, the latest
soft Canadian CPI raised the probabilities for a 50
bps cut at the upcoming meeting as BoC’s Macklem hinted to a possibility of
delivering larger cuts in case growth and inflation were to weaken more than
expected.
The market scaled back
those probabilities following the surprisingly good Canadian Retail Sales, the GDP report and the US NFP report. On Friday,
we get the latest Canadian Labour Market report which could influence the
market’s pricing.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD now trades above the key 1.36 resistance as the USD got a boost from the strong
US NFP report last Friday. The buyers will likely need a break above the recent
high at 1.3650 to gain even more confidence for higher highs. The sellers, on
the other hand, will want to see the price falling back below the 1.36 zone to
position for a drop back into the 1.34 handle.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that we had a strong rally from the lows. The area between the 1.36 and
1.3650 levels should be a buying zone for the buyers with a break to the upside
likely increasing the bullish momentum. The sellers, on the other hand, will
need the price to fall below the 1.36 handle to start targeting new lows with
the trendline
around the 1.35 handle as the first target.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that we have a minor upward trendline defining the current bullish momentum.
The buyers will likely keep on leaning on it to position for more upside, while
the sellers will look for a break below the trendline and the 1.36 level to
pile in for a drop into the next trendline. The red lines define the average daily range for today.
Upcoming
Catalysts
This week the calendar is a bit empty on the data front. The main events are all
scheduled for the latter part of the week. On Thursday, we have the US CPI and
the US Jobless Claims. On Friday, we conclude with the Canadian Labour Market
report, the US PPI and the University of Michigan Consumer Sentiment survey.