July 15, 2025
USDCAD open 1.3723, overnight range 1.3707-1.3726, close 1.3723
USDCAD got walloped thanks to hotter-than-expected US inflation which reduced the odds (slightly) for the Fed to cut rates in September. The chance the Fed cuts rates to 4.25% at the September 17 meeting dropped to 52.6% yesterday from 65.8% a week ago.
USDCAD rallied to a higher level despite the CAD/US 10-year interest rate differential narrowing to -87.3 basis points from -107.5 a week ago. This counter-intuitive movement can be attributed to a spike in US interest rates and renewed concerns over President Donald Trump’s tariff plans, both of which fueled increased safe-haven demand for the US dollar.
Prime Minister Mark Carney warned that whatever trade deal is negotiated with the US, it will include some level of tariffs. Too bad for American’s—they will pay the higher prices.
WTI oil prices dropped from 67.00 yesterday to 66.11 overnight due to broad US dollar strength. In addition, sentiment soured after API reported crude stocks surged by 19.1 million barrels last week.
US Core Producer Price data was weaker than expected rising 2.6% y/y compared to the forecast of 2.7% and below the 3.0% seen in Mays. So far, markets ignored the data.
Industrial Production and Capacity utilization reports are on tap.
Canada Housing Starts are rose 283,700 in June, beating the forecast and the previous upwardly revised result of 282,700
USDCAD Technical Outlook:
The intraday technicals are bullish while prices are above 1.3680 and looking for further gains to 1.3760. Failure to take out the topside suggests a retest of the uptrend line from the beginning of July at 1.3680.
Longer term, the latest rally is merely a correction with the bearish structure intact. USDCAD is below major resistance at 1.3850, the short term RSI’s are approaching overbought and the MACD is flat.
For today, USDCAD support is 1.3680 and 1.3650. Resistance is 1.3750 and 1.3780. Today’s Range 1.3680-1.3750.
The Mouth That Roared Keeps Roaring
Trump is in full-hyperbole mode while failing to grasp the details of yesterday’s inflation data. He tweeted, “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” Inflation wasn’t “Very Low”—it rose 0.29% m/m compared to 0.13% in May and the core measure rose 0.23% vs 0.13% previously. Traders understood the implications and knocked stock prices lower while boosting the US 10-year yield to 4.495% from 4.40% pre-data. Fed officials also understood the CPI report, and policymakers like Boston Fed President Susan Collins, Dallas Fed President Lorie Logan, and Richmond Fed President Tom Barkin warned of further price pressures from tariffs.
Tariff Deal Propaganda
President Trump took time away from front-running cryptocurrency announcements to trumpet another trade deal, this time with the 24th most important US trading partner—Indonesia. Naturally, their president was described as “Highly Respected.” He also tweeted that Indonesia “will pay the United States a 19% Tariff on all Goods they export to us,” which is an outright lie. Americans pay the tariff—not Indonesians.
Taking Stock
Asian equity traders were spooked by higher US rates and sold stocks. Australia’s ASX 200 fell 0.79% while Japan’s Topix lost 0.21%. Hong Kong’s Hang Seng index dropped 0.29%.
European bourses are mixed. The German Dax is up 0.14% while the French CAC 40 is down 0.09%. The UK FTSE rose 0.14%. S&P 500 futures are down 0.12% and the US 10-year yield is sitting at 4.472%. Gold (XAUUSD) is 3340.00.
EURUSD
EURUSD consolidated yesterday’s post-US CPI losses in a 1.1597-1.1629 range ahead of today’s US producer prices data. The single currency also suffered after French political drama reignited. The National Party led by Marine Le Pen threatened to topple the government if it went ahead with plans to scrap two national holidays. The intraday EURUSD technicals are bearish below 1.1650.
GBPUSD
GBPUSD suffered from the impact of the rebounding US dollar after Fed rate cut bets for September cooled following yesterday’s CPI report. UK inflation rose in June with Core-CPI climbing to 3.7% y/y from 3.5%. Many analysts suggest that the results were not hot enough to keep the Bank of England from cutting rates in August.
USDJPY
USDJPY consolidated gains in a 148.62-149.18 range following the jump in the US 10-year Treasury yield to 4.495% from 4.40% yesterday. The downgraded odds for rate cuts from the BoJ due to tariff threats and the Fed due to inflation are supporting prices.
AUDUSD
AUDUSD traded in a 0.6512-0.6535 range due to broad-based US dollar strength. Traders are looking ahead to tomorrow’s CPI and employment data.
NZDUSD
NZDUSD drifted in a 0.5938-0.5967 range due to widespread US dollar strength and a lack of domestic catalysts.
USDMXN
USDMXN soared from 18.6509 to 18.8803 yesterday then drifted lower in an uneventful overnight session. Higher US interest rates and tariff uncertainty are fueling price action.
USDCNY
PBoC fix: 7.1526 vs exp. 7.1914 (Prev. 7.1498)
Shanghai Shenzhen 300 fell 0.30% to 4007.20
Airbus signs cooperation agreement which will increase more production of A321 jet in China. The news arrives ahead of EU-China leaders summit next week.
FUN FACT: SCMP reports: 1 in 388 Hong Kong homeowners has a net worth of more than US$30 million, study finds
FX High, Low, Open
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance
