North American Mid-Week Market Update – Trump drama and the Next Fed Chair

North American stock markets largely recovered, particularly Tech, turning what was a scary correction into a small retracement since last week.

Most Indices now hover close to their all-time highs, with the Nasdaq remaining the furthest from its peak, down a measly 2.30% from its end-October record.

The December 10 FOMC cut is now a quasi-certainty, with a few bouts of lower data since last Thursday beginning to set the stage for another cut in January (currently priced at 27%).

Private employment has sent a warning of regressing employment numbers since early November, as seen with ADP's new weekly series throughout last month.

Numbers from this morning’s monthly report, which connects to the Challenger Layoffs report that shook markets last month, are also notable – By the way, the next Challenger report is due tomorrow.

Concerns over this weakening private labor sector are justified, as Jerome Powell based the Fed's first cut in September 2024 (from 5.50% to 5%) on this exact premise.

To complement the data, inflationary pressures appear to be easing: the ISM Prices Paid data is regressing (though it remains high), and Import prices are unchanged from this morning’s releases (September data, but still positive news).

Adding a political layer to the Fed debate, President Trump verbally called for the nomination of NEC Director Kevin Hassett as the next Fed Chair. Wall Street is seemingly uneasy about this choice, but looking at the Market today, things are far from priced in.

Trump is famous for judging his own performance by looking at the Stock Market, so he might take some time to think about this one.

On the northern border, Canadian data has started to show more upside after a strong rebound in their Q3 GDP, and this morning’s Labor Productivity report came in better than expected.

While Canadian PMIs are still telling another story, the land of maple syrup is at least sending signs of life – Could the CAD make a comeback in 2026?

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Most North American Indexes are up between 3% and 5% while the US Dollar is down 1.50% – This is a textbook example of what happens when Dovish Monetary policy gets priced in.

Keep note!

The US Dollar took a huge hit this week after staying resilient throughout last week's Fed Cut repricing.

It seems that there is quite a lag between the moment a cut prices back and actual movement in the Greenback. Still, other dynamics like the Next Fed Chair are also playing their part in this week's movement.

For now, the range mentioned in our recent in-depth analysis still holds, but could crack lower if weak data persists. Things will materialize on Friday after the Core PCE report.

Levels to place on your DXY charts:

Resistance Levels

• 100.00 to 100.50 Main resistance zone
• 100.376 November highs
• Top of channel and psychological level at 101.00
• 99.60 to 99.80 mini-resistance now pivot

Support Levels

• Higher timeframe Pivot 98.80 to 99.00 (testing lower bound)
• Weekly lows 98.82 and 8H MA 200
• Mini-support 98.50
• Main support 98.00
• August Range support 97.25 to 97.60

This chart shows well how individual pairs have been reacting since last week after Fed's Williams influential comments.

Always keep an eye on his speeches!

Another classic week for the Loonie: A bounce after Thursday's GDP data got met with some mean-reversion.

The drops in the CAD are getting more limited as time goes but overall, it still remains sold on pops.

USD/CAD is correcting quite largely after reaching new cycle highs just two weeks ago.

Now under its 8H 200-Period MA, the outlook for the pair is bearish but will have to break and close below the Higher timeframe pivot (1.3925) if bears want to retake full control.

Levels of interest for USD/CAD:

Resistance Levels

• 1.40 Major Pivot acting as resistance
• Cycle highs 1.4143 and Double top
• Resistance between 1.4120 to 1.4145
• Key resistance 1.4250

Support Levels

• 1.39 to 1.3925 Higher timeframe pivot, current support
• 1.38 Major support +/- 150 pips
• August range support 1.3750
• 1.3550 Main 2025 Support

The rest of the week will be the final crucial data points towards Next week's rate decision.

Thursday morning starts with Challenger Job Cuts which will be tracked closely due to their impact during the BLS shutdown. This gets followed immediately by the weekly Initial Jobless Claims (08:30 A.M. ET).

Markets will be looking for any cracks in employment trends that could sway the Fed's tone.

CAD traders also get a look at business activity with the Ivey PMI at 10:00 A.M. ET.

Friday, however, is the main event:

The spotlight will be entirely on the Core PCE Price Index (08:30 A.M. ET), the Federal Reserve's preferred measure of inflation.

• With the consensus holding steady at 2.9% YoY, any surprise here will directly dictate the market's pricing for next week's interest rate decision.
• Simultaneously, CAD traders face their biggest release of the month: the Net Change in Employment and Unemployment Rate. Expectations are flat (0K jobs added), so any major deviation could spark significant volatility for the Loonie.

The week wraps up with the Michigan Consumer Sentiment and Inflation Expectations at 10:00 A.M. ET.

Crucial Note: Apart from these final data points, the calendar is effectively clear. There won't be anything of significance until the FOMC meeting next Wednesday, making Friday's close critical for positioning.

Safe Trades!

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