August 26, 2025

USDCAD open 1.3848, overnight range 1.3842-1.3868, close 1.3861

USDCAD caught a bit of a bid thanks to Trump’s decision to fire Fed Governor Lisa Cook and his latest tariff threats against all countries with digital taxes. USDCAD also is underpinned by Trump’s threat to declare imports of Canadian softwood lumber a threat to national security and another hike on tariffs which are already 35%.

WTI oil is at the bottom of its overnight 63.65-64.77 range. Prices are weighed down by the Trumpification of the Fed which means lower rates—inflation be damned. India will get hit with a 20% additional US tariff on August 27 for buying Russian crude. However, Trump is trying to avoid offending China and giving China a pass for its Russian crude purchases.

Bank of Canada Governor Tiff Macklem is giving a speech in Mexico today about flexible inflation targeting.

US Durable Goods Orders for July fell -2.9% m/m (forecast -4.0%, previous -0.3%), while Durable Goods ex-transportation rose 1.1% m/m (forecast 0.2%, previous 0.3%),

Still to come; S&P Case-Shiller Housing Price Index and Consumer Confidence. All the data will be overshadowed by Trump’s take over of the Fed.

USDCAD Technical Outlook:

The intraday technicals are mildly bid above 1.3820 and are looking for a break above 1.3890 to target 1.3950. A move below 1.3820 suggests further downside to 1.3780.

The medium-term picture is slightly bearish while prices are below 1.3950 with a daily close below 1.3800 putting 1.3725 in play.

For today, USDCAD support is 1.3820 and 1.3780. Resistance is 1.3890 and 1.3920. Today’s Range: 1.3810-1.3910.

Cook Cooked

Trump fired Fed Governor Lisa Cook and then posted the dismissal letter on his TruthSocial account. It said he had “sufficient cause” to remove her because of (as yet, unproven) mortgage fraud. The legality of the move is questionable as she has not been formally charged or convicted of any crime. However, in 2025 America—Trump is the law.

In Defence of US Tech

The Trump administration is considering putting sanctions on EU or member state officials for implementing the EU Digital Tax. Such a move violates the Vienna Convention, World Trade Organisation rules, Principles of International Comity and rule of Law (Comity is defined as recognition one nation voluntarily affords within its territory to the legislative, executive, or judicial acts of another nation, out of mutual respect, deference, and courtesy, but not as a matter of obligation) and OECD principles.

Those violations may explain why last night Trump went the tariff route and tweeted “I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips.”

Taking Stock

Asian equity markets retreated overnight with Trump’s anti-Fed actions spooking traders. Japan’s Topix lost 1.08% and Australia’s ASX 200 fell 0.41%. Hong Kong’s Hang Seng dropped 1.18%.

As of 8:45 am EDT, French political uncertainty and Trump tariff threats knocked the French CAC-40 Index down by 1.37%. The UK FTSE 100 has lost 0.42% while the German DAX has shed 0.36%. S&P 500 futures are flat while the US 10-year Treasury yield is at 4.278%. Gold (XAUUSD) is 3378.45 and the US Dollar Index (DXY) is 98.19

EURUSD

EURUSD danced in a 1.1602-1.1660 range weighed down by a fresh wave of political uncertainty in France. The minority government of Prime Minister Francois Bayrou is expected to lose a confidence vote on September 8, over his austerity budget. Trump’s threat of tariffs and sanctions is another headwind limiting upside. The intraday technicals are bearish below 1.1680 and targeting support at 1.1580.

GBPUSD

GBPUSD churned in a 1.3434-1.3491 band. The UK BRC Shop Price Index was 0.9% m/m in August compared to 0.7% in July. The currency was underpinned by EURGBP selling due to French politics and EU/UK interest rate differentials, but trading is lighter than usual as it is the final week of summer.

USDJPY

USDJPY dropped, popped, then consolidated in a 146.99-147.91 range. Souring global risk sentiment due to Trump’s “takeover” of the previously independent Fed sparked safe haven demand for yen, which faded on the back of Japan/US trade talks this week. Trump insists that he will direct how Japan’s proposed $550 billion investment in the US is utilized. Japanese officials have not agreed to that.

AUDUSD

AUDUSD drifted in a 0.6470-0.6494 range, little changed from yesterday. The release of the minutes from the RBA meeting on August 12 didn’t offer traders anything new and they were ignored.

USDMXN

USDMXN is near the bottom of its 18.6480-18.7038 range with prices tracking broad US dollar moves vs the majors. The rise in US Treasury yields following news that Trump fired Fed Governor Lisa Cook underpinned prices but that impact is fading.

USDCNY

PBoC fix: 7.1188 vs exp. 7.1670 (Prev. 7.1161)

Shanghai Shenzhen CSI 300 fell 0.37% to 4452.59

Xi Jinping to meet with India Prime Minister Modi and Russian President Putin at Shanghai Cooperation Organisation summit in Shenzhen Aug 31-September 1.

China Deputy Chief Trade negotiator Li Chenggeng in Washington this week.

FX High, Low, Open

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