August 21, 2025

USDCAD open 1.3880, overnight range 1.3869-1.3886, close 1.3873

USDCAD drifted modestly higher in another quiet overnight session.  The FOMC minutes were not much of a factor as traders hope tomorrow’s Fed Chair Powell speech will provide clarity on the timing of interest rate cuts.  It won’t.  There are too many key economic data points between now and September 17, and since the Fed claims to be data-dependent, Powell will wait for the data.

WTI oil prices rallied from 62.78 to 63.48 and they remain near the top in NY. A larger than expected drop in US crude inventories (actual -6.01 million barrels, forecast -1.3 m, last week, 3.06 m) underpinned prices. A lack of progress in Russia/Ukraine ceasefire talks provided additional support.

US weekly jobless claims rose by 11,000 to 235,000 last week and the reacted was muted. The Philadelphia Fed Manufacturing index weakened from 15.3 to -0.3% in August but there were signs of inflationary pressures. The prices paid index increased 8 points to 66.8, its highest reading since May 2022. The current prices received index ticked up 1 point to 36.1.

Canadian Industrial Production Price index rose to0.7% m/m from 0.5% in June while the Raw Materials Price Index rose 0.3% compared to the 2.8% previously.

USDCAD Technical Outlook:

The intraday technicals are bullish while trading above 1.3830 and are looking to break above resistance in the 1.3900 area to extend gains to 1.3960. A move below 1.3830 suggests further 1.3720-1.3900 consolidation.

The medium-term picture remains unchanged. USD/CAD is bullish above 1.3760 inside a well0-defined 1.3540-1.3950 band.  The break above the 100-day moving average at 1.3790 suggesting further gains toward the 200-day moving average at 1.4035.

For today, USDCAD support is 1.3840 and 1.3810. Resistance is 1.3900 and 1.3950. Today’s Range: 1.3740-1.3920

Caution ahead of Powell Speech Friday

August markets are lethargic as a rule and never more so than the lead-up to the Fed Chair’s speech from the Jackson Hole Symposium. It’s not any different this year. This year, outlook around the FOMC monetary policy is being overshadowed by overt attempts by the White House to control the narrative—and the vote.

Traders have trimmed the odds for a 25 bp rate cut in September from the mid-90s to 81.2% but the hawkish-sounding FOMC minutes suggest they should be a lot lower. The minutes noted that the upside risk to inflation posed a greater risk when compared to the economy.

The US Office of National Intelligence will reduce its workforce by up to 40% according to its Director Tulsi Gabbard. The White House noted that it was a lackluster performance as the Trump Administration has slashed its collective intelligence by 95% since January 20, 2025.

Taking Stock

Asian equity markets were mixed. Australia’s ASX 200 rose 1.13% due to better-than-expected PMI data while Japan’s Topix dropped 0.51% after recording a record high on Tuesday.
As of 5:40 am, European bourses are trading negatively. The French CAC-40 Index is down 0.62%, the German DAX is down 0.30% and the UK FTSE 100 is off by 0.16%. S&P 500 futures are down 0.34% while the US 10-year Treasury yield is at 4.30%. Gold (XAUUSD) is 3341.96 and the US Dollar Index (DXY) is 98.29.

EURUSD

EURUSD bounced in a 1.1625-1.1663 range. Prices hit the low just before Eurozone and German PMI data and then reclaimed the top post-data. Eurozone composite PMI inched up to 51.1 from 50.9 but ING analysts noted “the eurozone economy continues to weather global storms quite well” then said “but a muted pace seems likely given significant downside risks to the outlook.” EURUSD remains locked in its week-long 1.1590-1.1730 band.

GBPUSD

GBPUSD mirrored EURUSD moves and traded in a 1.3436-1.3483 band with the top occurring post-PMI. The flash UK PMI Composite survey for August rose to 53.0 from 51.8, Services PMI rose to 53.6 from 51.8 while Manufacturing PMI dipped to 47.3 from 48.
S&P Global economists wrote “the PMI survey for August indicated that the pace of economic growth has continued to accelerate over the summer after a sluggish spring, the rate of expansion now at a one-year high.” GBPUSD is consolidating gains from the beginning of August and is in an uptrend above 1.3460.

USDJPY

USDJPY traded quietly in a 147.26-147.80 range with traders sidelined ahead of Fed Chair Powell’s speech on Friday. Traders are also awaiting tomorrow’s inflation data. CPI is expected to ease to 3.0% y/y from 3.3% which, if correct, would reduce the odds for a BoJ rate hike any time soon

AUDUSD

AUDUSD traded to a three-week low in a 0.6415-0.6437 range despite upbeat PMI data. Composite, Manufacturing, and Services PMI were all higher than in July. However, a moderation in Consumer Inflation Expectations to 3.9% from 4.7% reduced chances for rate hikes.

USDMXN

USDMXN traded sideways in an 18.7662-18.8126 range. Traders are awaiting the minutes from the Banxico interest rate decision from August 7 for more insight into how dovish policymakers really are.

USDCNY

PBoC fix: 7.1287 vs exp. 7.1748 (Prev. 7.1384).

Shanghai Shenzhen CSI 300 rose 0.39% to 4288.07.

FX High, Low, Open

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