USDCAD TECHS: Approaching Key Resistance
- RES 4: 1.3462 High Jun 5
- RES 3: 1.3441 61.8% retracement of the May 26 - Jul 14 downleg
- RES 2: 1.3427 High Jun 7
- RES 1: 1.3387 High Jul 7 and a key resistance
- PRICE: 1.3358 @ 15:50 BST Aug 4
- SUP 1: 1.3244 20-day EMA
- SUP 2: 1.3151/3093 Low Jul 31 / 14 and the bear trigger
- SUP 3: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 4: 1.3032 1.764 proj of the Apr 28 - May 8 - May 26 price swing
USDCAD short-term conditions have improved for bulls following this week’s strong recovery. Resistance at the 50-day EMA, which intersects at 1.3287, has been cleared. The move higher signals scope for a test of the next key resistance at 1.3387, the Jul 7 high. A break of this level would strengthen bullish conditions. Key support has been defined at 1.3093, the Jul 14 low. Initial support to watch lies at 1.3244, the 20-day EMA.
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USDCAD TECHS: Resistance Holds - For Now
- RES 4: 1.3427 High Jun 7
- RES 3: 1.3365 50-day EMA
- RES 2: 1.3355 High Jun 15
- RES 1: 1.3269/93 20-day EMA / High Jul 05
- PRICE: 1.3263 @ 16:18 BST Jul 5
- SUP 1: 1.3190/3117 Low Jun 28 / 27 and key support
- SUP 2: 1.3084 1.618 proj of the Apr 28 - May 8 - May 26 price swing
- SUP 3: 1.2992 50.0% retracement of the Jun - Oct 2022 bull rally
- SUP 4: 1.2954 Low Sep 13 2022
USDCAD is holding on to its most recent gains. The latest recovery still appears to be a correction and the trend is bearish. Looking at MA studies, they remain in a bear mode position, highlighting a downtrend. A resumption of weakness would open 1.2992, a Fibonacci retracement. On the upside, firm resistance is seen at 1.3269, the 20-day EMA. It has been pierced, a clear break would expose the 50-day EMA, at 1.3365.
US OUTLOOK/OPINION: Citi: Below Consensus For Payrolls But Otherwise Hawkish
- Citi note that while risks are again tilted towards stronger payrolls growth after 14 consecutive months of upside surprises relative to consensus, they see a slowing in June to a still-strong 170k.
- It’s based on a slight increase in initial jobless claims in the first weeks of June, which suggests somewhat less than usual summer hiring relative to seasonal factors, with June payrolls also expecting this substantial rise in non-seasonally adjusted June employment.
- However, other elements should still point to a very tight labor market, including a decline in the u/e rate to 3.6% (with risks of 3.5%) and AHE rising 0.4% M/M.
- All elements of the June employment report should be strong enough to keep the Fed raising rates in July, with more favorable employment seasonal factors beyond June also supporting our base case for another hike in September.
US TSYS: Little React to June FOMC Minutes, Rates Near Lows
- US rates finished broadly weaker, near late session lows Wednesday, as attention quickly turned to employment data (ADP early Thu, NFP Fri) that drove yields higher in the run up to the June FOMC minutes is back in focus. ADP Employment Change 225k est vs. 278k prior; Change in Nonfarm Payrolls 225k est vs. 339k prior.
- "Almost all participants noted that in their economic projections that they judged that additional increases in the target federal funds rate during 2023 would be appropriate," the report said. “Some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal.”
- Front month 10Y futures just marked 111-10.5 low (-19.5; yld 3.9434% high) before bouncing to 111-13 after the bell. Key technical support remains at 110-27+, the Mar 2 low. Curves remain steeper with short end rates outperforming (2s10s +7.831 at -100.717).
- There has been very little change in implied Fed rates with the dust settled on the FOMC minutes, which revealed that “some” participants favored hiking 25bps last month or could have supported such a proposal.
- FOMC-dated OIS sits with a 21.5bp hike for the Jul 26 decision, building to a cumulative 33bp of hikes to a terminal 5.40% in November, before 4bp of cuts to year-end and 51bp of cuts to Jun’24.
