Loonieviews

July 7, 2025

USDCAD open 1.3674, overnight range 1.3593-1.3686, close 1.3605

USDCAD rallied on the back of broad-based US dollar strength and caution as Canada/US trade talks continue. Prime minister Carney wants a deal by July 21 or else he will impose tariff countermeasures on the US.

Mark Carney was at the Calgary Stampede flipping pancakes and talking oil pipelines, including a new pipeline to British Columbia.

USDCAD did not get any benefit from higher oil prices or from the widening of the CAD/US 10-year interest rate spread from 92.0 last week to 0.99.2 today.

There are no Canadian or US economic reports of note today.

USDCAD Technical Outlook:

The intraday technicals are mildly bullish while prices are above 1.3605 and supported by the break above 1.3630, the downtrend line from June 23. A move above 1.3710 targets 1.3800. However, upside momentum is slowing and lacks conviction.

The 2025 downtrend cremains intact but recent price action shows signs of base-building, even though the momentum indicators remain bearish. A decisive break above the 1.3800-1.3830 area would snap the series of lower highs.

For today, USDCAD support is 1.3630 and 1.3590.  Resistance is 1.3790 and 1.3820. Today’s Range 1.3610-1.3710.

Priming the Pumps

WTI traded firmer in a 65.55–67.18 range despite increased supply. OPEC turned on the taps more than expected and announced that, effective August 1, production would increase by 548,000 b/day. The cartel is taking advantage of low global inventories and strong margins. Kazakhstan continues to ignore its OPEC quota and increased production by 7.5%. Saudi Arabia may be pumping more crude, but they also raised crude prices for Asian customers by $1.00 to $2.20/b above the regional benchmark.

“It’s in the Mail”

The postman may be ringing once or twice as he makes like Santa Callus and delivers tariff letters to 12 countries today. The letters will include a threat that if the trading partner does not comply with US demands, tariff levels will revert to the April 2 “Liberation Day” levels, but they will not go into effect until August 1.

Another BRIC in the Wall

“We don’t need no trade exemptions. We don’t need no import tolls

No sneaky tariffs on avocados, Donald, leave those goods alone!

Hey! Donald! Leave those goods alone!”

Trump took exception to BRICS (Brazil, Russia, India, China, South Africa, plus Indonesia, Saudi Arabia, United Arab Emirates, Iran, and Ethiopia) joint statement that criticized tariffs for disrupting global trade. Trump said the group espoused anti-American policies and that any country aligning with the group would face an additional 10% tariff.

Taking Stock

Asian equity indexes closed in the red due to tariff uncertainty. Japan’s Topix lost 0.57% while Australia’s ASX 200 closed down 0.16%. Hong Kong’s Hang Seng fell 0.12%.

European bourses shrugged off the tariff drama, and a 0.65% rise in the German DAX lifted the other indices higher. The French CAC 40 is up 0.12% while the UK FTSE 100 index is flat. S&P 500 futures are down -0.26%. Gold (XAUUSD) fell $26.72 to 3309.82 while the US 10-year Treasury yield is 4.353%.

EURUSD

EURUSD dropped from 1.1791 to 1.1723 overnight due to an uptick in risk aversion as the approach of tariff deadlines sparked safe-haven demand for US dollars. Trump has threatened the EU with a 50% tariff on all exports to the US without a deal. Prices were also trading softer on news Eurozone Retail Sales fell 0.7% m/m in May, which overshadowed a 1.2% rebound in German Industrial Production.

GBPUSD

GBPUSD traded negatively in a 1.3575–1.3662 range on broad US dollar strength. Traders are also concerned about domestic issues including the possibility of UK tax hikes and speculation that the Bank of England could cut rates at its August 7 meeting.

USDJPY

USDJPY is at the top of its 144.23–145.53 range after May wage growth rose just 1.0% y/y (forecast 2.4%). Wage growth has fallen for five months, which weighs on the inflation outlook and reduces the odds for a near-term BoJ rate hike. Prices were underpinned by the uptick in US Treasury yields.

AUDUSD

AUDUSD fell sharply, dropping from 0.6565 to 0.6486 due to risk aversion from the approach of Trump’s tariff deadline and expectations that the RBA will cut interest rates by 25 bps tomorrow.

NZDUSD

NZDUSD traded in a 0.5989–0.6063 range on the back of risk aversion from tariffs. The RBNZ is expected to leave rates unchanged at 3.25% at Wednesday’s meeting.

USDMXN

USDMXN bounced from its recent low, rising from 18.6045 to 18.7317 due to safe-haven demand for US dollars due to tariff angst. USDMXN continues to be weighed down by bearish technicals and a “lower-drama” US trade environment.

USDCNY

PBoC fix: 7.1506 vs exp. 7.1626 (Prev. 7.1535)

Shanghai Shenzhen 300 fell 0.43% to 3965.17

China responded to the EU’s public procurement ban of medical device imports by barring EU origin.

China/Brazil sign deal to strengthen economic cooperation.

FX High, Low, Open

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance