USDCAD Technical Analysis – Important Levels to Watch
US
- At its most recent meeting, the Fed kept interest rates steady, as predicted.
- The macroeconomic predictions were raised, and the Dot Plot revealed that the FOMC still expects another rate hike by the end of the year, with fewer rate cuts in 2024.
- Fed Chair Powell underlined the Fed’s reliance on statistics but added that they will proceed with caution.
- The headline results for the US CPI last week exceeded expectations, but the core measures were in line with estimates, and market pricing remained stable.
- The labor market remains very healthy, as evidenced by yesterday’s increase in Jobless Claims, albeit continuing claims fell for the second time in a row.
- The most recent US PMI revealed that the US economy is still rather resilient.
- The data for inflation predictions spiked back up in the University of Michigan Consumer Sentiment report released last Friday, which had overall negative results.
- This week’s US retail sales exceeded estimates by a wide margin and included favorable revisions to the prior data.
- The Fed members would probably pause in November as well because of the elevated long-term rates, which they continue to cite as a justification for caution.
- Yesterday, Fed Chair Powell emphasized the need to “proceed carefully” and the rise in long-term yields.
- The market no longer anticipates a raise from the Fed.
Canada
- As anticipated, the BoC kept interest rates at 5.00%, but it is still ready to hike them further if necessary.
- In his hawkish address, Governor Macklem of the Bank of Canada hinted at the possibility of another rate increase if the underlying inflation figures remained high.
- This week’s Canadian CPI was well below expectations, and the underlying inflation measures declined as a result, lowering the possibility of another rate hike by the BoC.
- In terms of the labor market, the most recent data exceeded expectations and revealed a new upswing in pay growth, which Governor Macklem stated the BoC is closely monitoring.
- The market does not anticipate a raise from the BoC at the next meeting.
USDCAD Technical Analysis – DailyTimeFrame
On the daily chart, we can see that the USDCAD pair drew back into the red 21 moving average, where buyers entered and successfully reversed the price with the help of the Canadian CPI data miss. The swing level around 1.3862 should be the buyers’ target because this is where we will likely find strong sellers entering with a clear risk over the high to aim for a decline into the trendline.
