We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment George discusses recent Q2 data that has shown evidence of a slowing US economy.
The US labour market has slowed with the unemployment rate breaking above 4% while CPI for June was weaker than expected. With CPI having declined for three months, our US rate strategist has not only brought forward the timing of the first expected rate cut but has added a cut to their profile. This may result in a shallower profile for USDCAD with a peak for the USD earlier than expected.
Going forward, George sees support at 1.3590 and resistance at 1.3785 as very important levels to watch, while maintaining a trading range of 1.3400 to 1.3900 for the month ahead. Thus, USD sellers should look to 1.3750 and 1.3850 as levels to reduce exposure while 1.3590 should provide an opportunity for USD buyers.