USDCAD TECHS: Short-Term Outlook Remains Bullish
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4345 @ 16:27 GMT Mar 21
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
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US TSYS: Leaning Bear Flatter As Fed Muses On QT End
The Treasury curve leaned bear flatter Wednesday.
- Futures started on the back foot in a continuation of the bearish price action following last Friday's post-retail sales peak, with developments in Europe (hawkish ECB member commentary, mixed UK inflation data) weighing.
- But TYs would reclaim ground largely in two moves: first around the equity cash open, through no particular trigger (data including housing starts were soft but overall mixed), and second after the release of the January FOMC minutes which suggested that some participants eyed a precautionary end to QT earlier than markets are anticipating.
- Conversely, the 20Y Bond auction tailed by 1bp, a return to weak form after a strong prior sale in January - the Treasury market reaction was negative but brief (half a tick lower in TYs).
- Even Fed cut expectations ticking higher (about 3bp for 2025), the belly of the curve modestly underperformed. Latest cash levels: The 2-Yr yield is down 3.6bps at 4.2697%, 5-Yr is down 3.9bps at 4.363%, 10-Yr is down 2.2bps at 4.5288%, and 30-Yr is down 0.6bps at 4.7597%. In futures, Mar 10-Yr futures (TY) up 4.5/32 at 108-31.5 (L: 108-21.5 / H: 109-00)
- Looking ahead, Fed's Jefferson speaks after the cash close (subject: household balance sheets).
- Thursday's schedule includes the Philly Fed manufacturing survey alongside weekly jobless claims, while the highlight of the Fedspeak schedule is St Louis's Musalem.
STIR: Implied 2025 Cuts Edge Higher After Fed Minutes
The futures-implied Fed funds path shows slightly more anticipated easing following the release of the January FOMC minutes.
- We would attribute this dovish reaction mainly to speculation that the Fed may be closer to ending QT than previously thought based on the extensive discussion on balance sheet policy in the January meeting minutes (though as we noted earlier, it seems such sentiments remain in the minority on the Committee).
- While the minutes release nudged cumulative 2025 pricing less than 1bp lower, the biggest move of the session was on headlines earlier in the session on US -Ukraine-Russia negotiations which appeared to help steer rates and equities lower.
- The first full 25bp rate cut remains priced only by September's meeting but more fully after today's moves (27bp vs 25bp prior session), with cumulative cuts for 2025 totaling 37-38bp to 3.96% (vs 35bp and 3.94% prior).
| 2025 Meeting | Current FF Implieds (%), LH | Cumulative Change From Current Rate (bp) | Incremental Chg (bp) | Prior Session (Feb 18) | Chg Since Then (bp) |
| Mar 19 | 4.32 | -0.6 | -0.6 | 4.32 | 0.0 |
| May 07 | 4.30 | -3.3 | -2.7 | 4.29 | 0.7 |
| Jun 18 | 4.20 | -13.1 | -9.8 | 4.21 | -0.7 |
| Jul 30 | 4.15 | -18.2 | -5.1 | 4.16 | -1.0 |
| Sep 17 | 4.06 | -27.2 | -9.0 | 4.08 | -1.8 |
| Oct 29 | 4.02 | -31.3 | -4.1 | 4.03 | -1.5 |
| Dec 10 | 3.96 | -37.4 | -6.1 | 3.98 | -2.3 |
AUDUSD TECHS: Bulls Remain In The Driver’s Seat
- RES 4: 0.6471 High Dec 9 ‘24
- RES 3: 0.6429 High Dec 12 ‘24
- RES 2: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 1: 0.6384 High Dec 13
- PRICE: 0.6347 @ 16:15 GMT Feb 19
- SUP 1: 0.6305/6231 50-day EMA / Low Feb 10
- SUP 3: 0.6171/6088 Low Feb 4 / 3
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.6000 Round number support
AUDUSD is trading at its recent highs and a bull theme remains intact. The pair has cleared 0.6331, the Jan 24 high and a key short-term resistance. The breach highlights a stronger reversal and paves the way for gains towards 0.6414, a Fibonacci retracement. Note that moving average studies remain in a bear-mode position. This suggests the latest recovery is a correction. Initial firm support to watch is 0.6231, the Feb 10 low.
