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USDCAD Market Update

1/3/2023 12:41 PM

USD/CAD is trading above 1.3550 (Fibonacci retracement 23.6%, Murrey level [3/8]), trying to consolidate above it.

The Canadian currency came under pressure after the decline in China's Manufacturing PMI, which may indicate a further slowdown in the global economy and a possible reduction in oil consumption, which could negatively affect Canadian exports. According to the National Bureau of Statistics (NBS) in December, the value decreased from 48.0 points to 47.0 points, and the composite indicator from Caixin fell from 49.4 points to 49.0 points. Nevertheless, experts hope that the easing of quarantine restrictions will act as a driver for the recovery of macroeconomic indicators during this year.

The most important event of the week, which can seriously affect the movement of the trading instrument, will be the publication of December data from the US labor market. If it continues to demonstrate stability, inflation will remain at 3.7%, and Employment Change will live up to forecasts, adding 200.0 thousand, the US Federal Reserve will receive an additional argument in favor of further tightening monetary policy to combat the rapid growth of consumer prices.

Today, market participants will pay attention to the December data on business activity in the manufacturing sectors of the US and Canada, but they are unlikely to drastically affect the price. In both cases, the indicators are expected to decrease: in the USA the index may fall from 47.7 points to 46.2 points, and in Canada it may decrease from 49.6 points to 49.0 points.

Now the price of the asset is close to the center line of Bollinger Bands around 1.3600, consolidation above which will allow to continue the upward movement to the levels of 1.3793 (Murrey level [5/8]) and 1.3975 (the area of October highs). If the level of 1.3427 (Murrey level [2/8]) is broken down, the decline may resume to the area of 1.3300 (Murrey level [1/8]) and 1.3183 (Murrey level [0/8], Fibonacci retracement 50.0%).

Technical indicators confirm the growth possibility. Bollinger Bands and Stochastic are directed upwards, and MACD histogram is stable in the positive zone.

Resistance levels: 1.3600, 1.3793, 1.3975. | Support levels: 1.3427, 1.3300, 1.3183.

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