August 13, 2025

USDCAD open 1.3752, overnight range 1.3752-1.3782, close 1.3775

USDCAD trickled lower overnight, but it is the laggard among the major G-10 currencies. US Treasury Secretary Bessent’s call for a 50 bp rate cut in September spurred widespread US dollar selling pressure, while ongoing Washington political drama added to the greenback’s woes. USDCAD pressure is also due to the latest cautious Bank of Canada outlook in the face of dovish Fed expectations.

The less-than-impressive USDCAD sell-off may be due, in part, to China’s latest anti-Canada trade move. China has nailed Canada with a 76% tariff on canola, and they just launched an anti-dumping investigation into Canada’s pea starch exports. Canada’s tariffs on Chinese EV cars and steel are behind the move.

WTI oil is under pressure and trading in a 62.55-63.34 range because of oversupply concerns. The American Petroleum Institute reported a 1.5 million gain in US crude stocks for last week, but the real damage came from the Energy Information Administration. The EIA is forecasting that Brent crude will average less than $60.00/barrel in Q4, the lowest average since 2020. The EIA is forecasting record US production exacerbating an oil glut.

The US and Canadian economic calendars are bare.

USDCAD Technical Outlook:

The intraday technicals are bearish while trading below 1.3790 after failing to break above resistance at 1.3870 and looking for a move through support at 1.3730 to target 1.3680.

USDCAD has churned within a 1.3700-1.3820 range for two weeks and after failing to extend gains, the bottom end of the band is due for a test. The medium term bias is bearish with a breach of 1.3700 targeting 1.3620.

For today, USDCAD support is 1.3730 and 1.3700. Resistance is 1.3790 and 1.3810. Today’s Range: 1.3720-1.3790

“Go Big or Get Out of Here”

The White House wants lower rates and the message to Fed Chair Jerome Powell is essentially cut rates or quit. Treasury Secretary Scott Bessent undermined Powell when he called for a 50 bp rate cut in September. He justified his view saying, “the Fed could have been cutting rates in July” if it had known what the revised job numbers were.

Trump’s campaign to force Fed Chair Powell to quit may be moving from the insult stage to a tame Federal court. The President is pondering a lawsuit against Powell for what Trump claims is “mismanagement of the Fed’s building renovations.” The cost has ballooned to $2.5 billion from $1.7 billion.

The credibility of US economic data is taking another hit after Trump nominated E. J. Antoni to head the Bureau of Labour Statistics. The man is certainly qualified to head the department, but it is his support for Trump that got him the nod.

Taking Stock

All the major Asian equity indexes rallied except for Australia’s ASX 200, which fell 0.60%. Japan’s Topix rose 0.83%, while Hong Kong’s Hang Seng surged 2.58%.

European bourses are trading higher due to improved global risk sentiment led by a 0.79% rally in the German Dax. The French CAC-40 index is up 0.53%, while the UK FTSE 100 has gained 0.22%. S&P 500 futures have gained 0.21% and the 10-year Treasury yield is steady at 4.255%. Gold (XAUUSD) is 3358.72, while the US dollar index (DXY) is 97.70, after trading in a 97.63-98.08 range. All as of 5:35 PDT.

EURUSD

EURUSD rallied in a 1.1669-1.1730 range and sits at the top of that band in NY. Broad-based US dollar selling pressure stemming from calls for the Fed to cut rates by 50 bps in September, combined with Trump opining about suing Jerome Powell for Fed building renovation cost over-runs, are weighing on the greenback. German CPI came in as expected, while wholesale prices fell 0.1% m/m (forecast 0.2%).

GBPUSD

GBPUSD surged from 1.3493 to 1.3574 where it is trading in NY, thanks to a lingering boost from a tame UK employment report and widespread US dollar selling pressure after the US Treasury Secretary’s aggressive Fed rate cut comments. Tuesday’s US CPI data came in as expected, which ignited the rate cut chatter and, combined with US political theater, weighed on the greenback.

USDJPY

USDJPY traded negatively in a 147.18-148.17 range due to speculation of deeper-than-expected Fed rate cuts, falling US Treasury yields, and improved global risk sentiment. Traders ignored the 2.6% y/y increase in PPI, which was higher than forecast (2.5%) but below the June level of 2.9%.

AUDUSD

AUDUSD rallied overnight and is at the top of its 0.6516-0.6558 range due to market chatter about the Fed needing to cut 50 bps in September. The gains were supported by the positive risk sentiment tone and rising global stock markets. Australia’s wage price index rose 3.4% y/y in Q2, a tick higher than forecast (3.3%).

USDMXN

USDMXN is trading defensively in an 18.5247-18.6099 range, with the losses fueled by Fed rate cut fever. The latest talk advocating a 50 bp rate cut in September is the catalyst, contrasting with the more cautious tone by Banxico following the August 7 meeting.

USDCNY

PBoC fix: 7.1350 vs exp. 7.1759 (Prev. 7.1418)
The Shanghai Shenzhen CSI 300 rose 0.79% to 4176.58
China warns off an American guided missile carrier, USS Higgins, after it sailed into the waters around Huangyan Island in the South China Sea claimed by China and the Philippines.

FX High, Low, Open

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics