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Fundamental
Overview
The US Dollar got a bit of
a boost this week as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40% as a result.
On the data side, the ISM Manufacturing PMI released yesterday missed
expectations slightly. On the bright side, the new orders index improved a
little which might be an early signal of better times ahead. By contrast, the
employment component fell further into contraction but remained above the cycle
low.
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 and the GDP
report last week.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD now trades in a range between the 1.36 resistance
and 1.34 support. The market participants will likely keep on playing the range
by buying at support and selling at resistance until we get a breakout.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the price broke below the support zone around the 1.3490 level
yesterday. We can expect the sellers to pile in around these levels to position
for a drop into the 1.34 support, while the buyers will want to see the price
bouncing back above the recent support to target a rally into the 1.36 resistance.
USDCAD Technical
Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, there’s
not much else to add here as the sellers will look for an extension to the
downside into the next support at 1.3460, while the buyers will either buy the
dip around the 1.3460 level or wait for a bounce back above the 1.3490 level to
target the 1.36 resistance. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US ADP report. Tomorrow, we get the latest US Jobless Claims
figures and the US ISM Services PMI. Finally, on Friday, we conclude the week
with the US NFP report.