• If Q1 2024 numbers continue to be encouraging, that will be important
• Need to be more confident that disinflation is sustainable
• ECB is independent of moves by other central banks

This ties together with Nagel’s earlier remarks here. And it reaffirms the narrative that the ECB wants to wait on the next set of wages data in May before acting in June at the earliest.

This article was written by Justin Low at www.forexlive.com.

• The Fed left interest rates unchanged as
  expected at the last meeting while dropping the tightening bias in the
  statement but adding a slight pushback against a March rate cut.
• The US CPI beat
  expectations for the second consecutive month with the disinflationary trend
  reversing.
• The US PPI beat
  expectations across the board by a big margin.
• The US Jobless Claims beat
  expectations with the data remaining steady.
• The latest US PMIs
  increased further from the prior month with the Manufacturing PMI beating
  expectations and the Services PMI missing.
• The US Retail Sales missed
  expectations across the board by a big margin.
• The market now expects the first rate cut in June.

CAD

• The BoC left interest rates unchanged at
  5.00% as expected and dropped the language about being prepared to hike if
  needed.
• The latest Canadian CPI missed expectations across the
  board with the underlying inflation measures falling, which will be a welcome
  development for the BoC.
• On the labour market side, the latest report beat
  expectations but we saw a contraction in full-time employment and a fall in
  wage growth.
• The Canadian PMIs improved in
  January although they remain both in contractionary territory.
• The market expects the first rate
  cut in June.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD probed
below the trendline and red
21 moving average but
reversed the move quickly, eventually finishing back above it. This might have
been a fakeout, which is generally a reversal pattern, so the buyers could
start to pile in with more conviction to position for a rally into the 1.3620
level. The sellers, on the other hand, will want to see the price falling back
below the trendline to position for a drop into the 1.3360 level.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more closely the price
action around the trendline with the break and the quick rebound. We can also
notice that the latest leg lower diverged with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for a pullback into the downward
trendline where we will likely find the sellers stepping in to target a break
below the major upward trendline. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the 1.3620
level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we had
a counter-trendline for the pullback into the major trendline which was eventually
breached this morning. The buyers should keep on bidding the price into the
downward trendline but if the price were to reverse and break below the support zone
around the 1.3460 level though, we can expect the sellers to pile in more
aggressively to extend an eventual selloff into the 1.3360 level.

This article was written by FL Contributors at www.forexlive.com.

It’s been a quiet one in terms of movement in European trading today. The dollar is steady as major currencies are showing very little appetite, with most dollar pairs seeing less than 10 pips change at the moment. It is only USD/JPY which is up slightly to 150.71, helped by slightly higher yields.

Besides that, there really isn’t much to work with on the session thus far. Risk tones are more muted as well with European indices seeing light changes while US futures are flattish. It seems like stocks are consolidating gains for now after the surging run higher yesterday.

Going back to FX, EUR/USD is still keeping just under its 200-day moving average of 1.0827 for now. Similarly, AUD/USD also attempted a run above its own 200-day moving average yesterday only to fall short amid the dollar reversal as well. The pair now trades little changed at 0.6559, below the key technical level at 0.6561.

As we look to wrap things up on the week, do keep an eye out on the bond market. 10-year Treasury yields are up 1.6 bps to 4.342% and that is just above its 100-day moving average of 4.327% currently. Further selling in bonds when we get to US trading could inspire some broader market moves before the weekend.

This article was written by Justin Low at www.forexlive.com.

• Will only get key price pressure data in Q2, then only we can „contemplate a cut in interest rates“
• Price outlook is not yet clear enough
• Some setbacks on inflation may be possible

The Q4 2023 wages data was released earlier this week here. But as mentioned at the time, policymakers are likely to want to wait on the Q1 2024 data – which will only be out in May – before proceeding with rate cuts. And Nagel’s comments serve to reaffirm that sentiment.

This article was written by Justin Low at www.forexlive.com.

• Confident that risks of de-anchoring of inflation expectations have come down
• There is hope to achieve soft landing and taming inflation without causing a recession

The question now is whether is it enough to get inflation back down towards the desired 2% target. For now, we can still expect rate cuts in the near future but the pace of the trajectory may still be in question.

This article was written by Justin Low at www.forexlive.com.