June 25, 2025

USDCAD: open 1.3730, overnight range 1.3708-1.3741, close 1.3725

USDCAD’s overnight range was unchanged from yesterday’s as traders assess the latest Canadian inflation data, Powell’s Congressional testimony, tariffs and Carney’s budget-breaking Nato spending commitment.

Canadian dollar direction remains at the mercy of broad-US dollar sentiment. Yesterday’s Canadian inflation report did nothing to suggest that the Bank of Canada would deviate from its wait-and-see approach.

Prime Minister Mark Carney announced Canada would be spending about $150 billion/year to reach NATO’s 5% of GDP spending target. The money would come from developing deposits of critical minerals.

The US and Canada economic calendars are light. The only data of note is US new home sales.

USDCAD Technical Outlook: USDCAD has bounced inside a 1.3530-1.3750 range for all of June except for the very brief spike to 1.3800 on Monday. That range should remain intact until next week.

The intraday technicals are mildly bullish above 1.3690 but that uptrend line is in jeopardy if prices fail to move above resistance at 1.3740.  A move below 1.3690 targets 1.3650.

Longer term, the April 10 downtrend line is intact while prices are below 1.3870 and momentum indicators suggest the latest rally was just a correction. A break below the 1.3650-60 area targets 1.3570.

For today, USDCAD support is 1.3710 and 1.3660.  Resistance is 1.3740 and 1.3790. Today’s Range 1.3690-1.3780

Markets in Brief

Negative risk sentiment stemming from the Iran/Israel war has dissipated, leaving traders to shift their focus to tariffs, interest rates, and economic data. The most important interest rate view is that of the Fed, and Powell’s testimony yesterday. His remarks to the House Finance Committee were very similar to last week’s press conference—wait and see.
Five other Fed policymakers weighed in with views that appeared to agree with Powell’s stance. Governor Michael Barr said monetary policy is well-positioned for wait-and-see. Boston Fed President Susan Collins believes the current policy is necessary, and Cleveland Fed President Neal Kashkari said the Fed needs more clarity on inflation.

Crudely Speaking
WTI oil consolidated its recent losses in a 64.79–65.76 range. API weekly crude stocks data showed U.S. inventories fell by 4.277 million barrels last week. Iran oil exports have faced heavy sanctions, but the country managed to dodge a lot of them using a “shadow fleet.” Trump appears to have legitimized the use after saying China can still buy Iranian crude.

Stock Taking
Asian equity indexes closed flat except for those in China. The Hong Kong Hang Seng index rose 1.23% while Japan’s Topix and Australia’s ASX 200 finished virtually unchanged.
European traders are a tad more cautious. The German Dax is down 0.44%, the French CAC 40 index has lost 0.39%, and the UK FTSE 100 is largely unchanged.  S&P 500 futures are up a modest 0.14%. The 10-year Treasury yield is nursing its recent losses and sits at 4.30% while gold is steady at 3325.03.(all as of 5:30 am PDT)

EURUSD
EURUSD failed to extend yesterday’s gains and traded defensively in a 1.1591–1.1631 range with traders looking for fresh incentives to resume buying the single currency. Traders are also concerned about a lack of progress in EU/US trade talks and possible retaliation by the EU.

GBPUSD
GBPUSD held on to yesterday’s gain and drifted in a narrow 1.3604–1.3634 range as the bump from the Israel/Iran ceasefire rally fades. Gains were capped after a report suggested that UK economic growth from the beginning of the year will start unwinding due to the impact of Trump’s tariffs and higher UK taxes.

USDJPY
USDJPY inched higher in a 144.61–145.66 range, and it is at the top of that band in NY. The easing of tensions between Israel and Iran continues to fuel USDJPY demand as safe-haven yen trades are unwound. The BoJ Summary of Opinions suggested that the board outlook for raising rates was not unanimous due to uncertainty around U.S. tariffs.

AUDUSD
AUDUSD traded sideways in a 0.6488–0.6508 range, supported by broad-based U.S. dollar weakness. However, lower-than-expected inflation (actual 2.2% y/y vs forecast 2.3% and April’s 2.4%) limited gains as it boosted the odds that the RBA cuts rates by 25 bps on July 8.

NZDUSD
NZDUSD traded with a slight bid in a 0.6004–0.6040 range due to lingering positive risk sentiment from the Trump-ordered Iran/Israel ceasefire.

USDMXN
USDMXN traded in a 18.9653–19.0190 range overnight and is trading at 19.0072 in early NY. Prices are consolidating losses after Mexican inflation met expectations for the first half of June, paving the way for another Banxico rate cut on Thursday. Dovish interpretations of Powell’s Congressional testimony also weighed on prices.

USDCNY
PBoC fix: 7.1668 vs exp. 7.1709 (prev. 7.1656)
Shanghai Shenzhen 300 rose 1.44% to 3960.07
Reuters reported that Chinese Premier Li Qiang said, “We aim to help China transition from a major manufacturing power to a colossal consumer market.”
China plans to increase gold production by 10% in the next 3 years.

FX High, Low, Open (as of 6:00 AM ET)

FX data source: Yahoo Finance / Bloomberg / OANDA. Charts: Insert image or URL if applicable.