June 27, 2025
USDCAD open 1.3653, overnight range 1.3628-1.3663, close 1.3740
USDCAD is trading with a bearish bias due to a range of US-centric developments that have undermined the US dollar. Trump’s tirade berating Fed President Jerome Powell and White House leaks about naming Powell’s successor in September have fueled speculation that the next Fed president will be a Trump lackey. Furthermore, a couple of Fed officials appear to be at odds with Powell and are advocating rate cuts sooner than expected.
Canada’s economy shrank by 0.1% in April, weaker than expected and evidence that the risk of tariffs are impacting the economy.
The possibility that the China/US trade “understanding” leads to a real deal should keep USDCAD on the defensive today, despite the fact that a Trump “deal” is merely a mirage.
Pre-emptive month end portfolio rebalancing and a mess of chunky USDCAD option expiries suggest it will be a choppy trading session.
Reportedly, $2.8 billion of USDCAD options with strikes between 1.3630 and 1.3650 expire today.
USDCAD Technical Outlook:
The intraday technicals are mixed with a break above 1.3670 suggesting gains to 1.3740 while a move below 1.360 targets 1.3560
Longer term, USDCAD is bearish while prices are below 1.3700, looking for a break below 1.3600 to test support at 1.3550. A move above 1.3750 puts 1.3800 in play. The momentum indicators are mixed but suggest that enthusiasm for the downside is waning.
For today, USDCAD support is 1.3610 and 1.3550. Resistance is 1.3710 and 1.3750. Today’s Range 1.3610-1.3710
Markets in Brief
“Hark! The herald Commerce Secretary says, Glory to the Trumpster Pres.” President Trump’s lapdog Howard Lutnik is claiming that the US and China signed a trade “understanding,” which means America will get rare-earth minerals in return for the US removing countermeasures.
Beijing authorities said something similar: “China will review and approve export applications for controlled items in line with laws and regulations, while the US side will correspondingly lift a series of restrictive measures against China.”
The key word missing in the hyperbole from the US and China statements is “deal.”
Inflation in Focus
US May Personal Consumption Expenditure-Price Index data came in at 0.1% m/m as expected but personal spending shrank by 0.1%, suggesting consumers are not shopping. Today’s data did not change the Fed narrative, at least for Powell who is content to wait-and-see.
Later today, the Michigan Consumer Sentiment report (forecast unchanged at 60.5) will be analyzed for insights and clues as to the timing of the next Fed rate cut.
Oil
WTI oil remains on the defensive in a 65.32–65.93 range after the Iran/Israel ceasefire greatly reduced the risk of a supply disruption. Prices are further undermined by a report that the US will delay refilling its Strategic Petroleum Reserves for seven months.
Stock Taking
Asian equity indexes closed on a mixed note. Australia’s ASX 200 fell 0.43% while Japan’s Topix climbed 1.20%. Hong Kong’s Hang Seng fell 0.18%.
In Europe, the French CAC 40 index is up 1.41%, easily beating the German Dax which has risen 0.79% and the UK FTSE 100 which is up 0.60%. S&P 500 futures have gained 0.33% while gold XAUUSD) is down over $55.00 to 32872.13.
EURUSD
EURUSD traded in a 1.1681–1.1727 range overnight. Traders have largely ignored disappointing Eurozone economic sentiment (actual 94 vs. May 94.8) and Industrial Confidence (actual -12 vs. May -10.4) and focused on US/China trade developments. In addition, bearish broad-based US dollar sentiment on the perception that the Fed is in danger of losing its independence is boosting prices. In addition, the European Union is looking at ways to appease Trump and avoid the threatened tariff bump to 50%.
GBPUSD
GBPUSD consolidated yesterday’s gains in a 1.3716–50 range. Improved risk sentiment on talk of a US and China trade “deal” and speculation about sooner-than-expected Fed rate cuts are supporting prices.
USDJPY
USDJPY consolidated this week’s losses in a range of 144.18–144.81. Tokyo June CPI rose 3.1% (previous 3.4%) and Core-CPI rose 3.1% vs. 3.3% previously. The drop was due to a one-off cut in electricity prices, but even so, the level is well above the BoJ’s 2.0% target. The result gives the BoJ scope to hike rates as inflation looks sustainable.
AUDUSD
AUDUSD rallied then fell in a 0.6540–0.6562 range overnight. Negative risk sentiment is simmering in the background after officials from Iran denied talk that they would meet with the US.
NZDUSD
NZDUSD traded choppily but with a bit of a bid in a 0.6049–0.6079 range. Consumer confidence rose to 98.8 from 98.2 in May, but traders were cautious ahead of today’s key US inflation report.
USDMXN
USDMXN traded sideways overnight and opened in NY close to where it closed Thursday. Banxico cut its benchmark rate by 50 bps to 8.0% as expected but with one dissent. Deputy Governor Jonathan Heath wanted to leave rates unchanged. The statement was tweaked to suggest additional rate cuts would be in smaller increments.
USDCNY
PBoC fix: 7.1627 vs. exp. 7.1771 (prev. 7.1620)
Shanghai Shenzhen 300 fell 0.61% to 3921.76
China May Industrial Profit fell 1.1% in May (YTD) due to “insufficient effective demand, declining prices of industrial products and fluctuations in short-term factors,” as per NBS.
China and US trade talks have progressed. China will review and approve export applications for rare-earth minerals while the US removes some of its limits. It’s progress, not a sweeping trade deal.
FX High, Low, Open
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance
