• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US CPI and
  the US PPI beat
  expectations for the second consecutive month.
• The NFP report beat
  expectations on the headline number, but the unemployment rate and the average
  hourly earnings missed notably. Moreover, the US Jobless Claims beat
  expectations across the board with a big positive revision to Continuing
  Claims.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Retail Sales missed
  expectations across the board although the data improved from the prior month.
• The market sees basically a 50/50 chance of a hike
  in June now.

CAD

• The BoC left interest rates unchanged at
  5.00% as expected stating that further easing in underlying inflation is needed.
• The latest Canadian CPI missed expectations across the
  board with the underlying inflation measures falling.
• On the labour market side, the latest report beat
  expectations but we saw a fall in wage growth which is something that the BoC
  is watching closely.
• 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 broke
through the key resistance level at
1.3540 and extended the rally into new highs. The buyers piled in on the
breakout and will now target the 1.3620 level. That’s where we can expect to
find the sellers to step in with a defined risk above the level to position for
a drop into the 1.3359 level.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
recently consolidated around the 1.3540 level before moving up as the buyers
piled in around the red 21 moving average. From a
risk management perspective, the buyers will have a much better risk to reward
setup around the trendline,
although this looks like a story for another time as the current bullish
momentum seems strong enough to reach the 1.3620 level first. The sellers, on
the other hand, will want to see the price breaking below the trendline to
invalidate the bullish setup and increase the bearish bets into the 1.3359
level.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher is diverging 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 minor
black trendline where we will also find the 4-hour 21 moving average for confluence. This
is where we can expect the buyers to step in with a defined risk below the
trendline to position for a rally into the 1.3620 level with a better risk to
reward setup. The sellers, on the other hand, will want to see the price
breaking lower to pile in for a drop into the major trendline around the 1.35
handle.

Upcoming Events

Today we get the Canadian CPI figures. Tomorrow, we
have the FOMC rate decision on the agenda where the central bank is expected to
keep rates unchanged. On Thursday, we get the latest US PMIs and Jobless Claims
figures. Finally, on Friday, we conclude the week with the Canadian Retail
Sales data.

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