FundamentalOverview

Late Thursday, around 1:00PM ET, WSJ’s Timiraos published an article which seemed suggesting that a 50bps cut was still being discussed. The market responded by raising 50 bps cutprobabilities to around 40% from 13% before the news.

Nick Timiraos is considereda Fed “insider”, so the market is attentive to all of his pieces concerningpotential Fed decisions. The probability for the Fed to cut by 50 bps at theupcoming meeting stand now around 60% with a total of 118 bps of easing byyear-end.

These repricing weakenedthe US Dollar across the board as Treasury yields fell further. Once we aredone with the Fed decision, the focus will switch back to the economic data. Incase we start to see better figures, the market might start to pare back theaggressive easing expected in 2025 supporting the greenback in the short-term.

For the BoC, the marketsees a 25% probability of a 50 bps cut at the upcoming meeting and a total of68 bps of easing by year-end. Governor Macklem last week raised the prospect oflarger cuts if growth and inflation were to fall more than expected.

USDCADTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that USDCAD is testing the key resistance around the 1.36 handle. This is wherethe sellers are stepping in with a defined risk above the resistance toposition for a drop back into the 1.34 handle. The buyers, on the other hand,will want to see the price breaking higher to increase the bullish bets intothe 1.38 handle next.

USDCAD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that the pair is now trading in a tight range between the 1.3560 supportand the 1.36 resistance. The buyers will want to see the price breaking out tothe upside to increase the bullish bets into new highs, while the sellers willlook for a break lower to pile in for a drop back into the 1.34 handle.

USDCAD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, we cansee more clearly the tight range and the choppy price action. There’s not muchelse to add here as the market participants will wait for a breakout on eitherside. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the Canadian CPI, the US Retail Sales and the US IndustrialProduction data. On Wednesday, we have the FOMC Rate Decision. On Thursday, weget the latest US Jobless Claims figures. On Friday, we conclude with theCanadian Retail Sales.