Fundamental
Overview
Yesterday, the USD got a
boost from a higher than expected US CPI report but gave back the gains pretty quickly.
There are two reasons for such a reaction.
The first is that at the
same time of the US CPI release we got the US Jobless Claims figures which
jumped to the top of their yearly ranges. The culprit was attributed mainly to
Hurricane Helene and the strikes.
The second reason is that
the market was already positioned for a higher than expected reading as we’ve
been seeing consistent upside in Treasury yields and the US Dollar in the days
leading up to the release. Therefore, we got kind of a “sell the fact”
reaction.
On net, it was a slightly
hawkish report but it looks like the market needs some more reasons to keep
bidding the US Dollar now that the market’s pricing is back in line with the
Fed’s projections.
On the CAD side, the market
is pricing in a 52% probability of a 50 bps cut at the upcoming meeting. Today,
we get the Canadian labour market report where weak data will likely strengthen
the chances for a 50 bps cut.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD is now trading near a key resistance around the 1.3785 level. This is
where we can expect the sellers to step in with a defined risk above the level
to position for a drop back into the 1.36 support. The buyers, on the other
hand, will want to see the price breaking higher to increase the bullish bets
into the 1.3860 level next.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that we had a huge rally the lows with basically no pullback. We have a
steep upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on it to position for further
upside, while the sellers will want to see the price breaking lower to increase
the bearish bets into the 1.36 support.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see more clearly the recent price action and the steep trendline. There’s not
much else to see here as the buyers will look for a break of the resistance or
a bounce on the trendline to keep targeting new highs. The sellers, on the
other hand, will likely pile in around these levels or wait for a break below
the trendline to position for new lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the Canadian Labour Market report, the US PPI
and the University of Michigan Consumer Sentiment survey.
