August 27, 2025

USDCAD open 1.3855, overnight range 1.3828-1.3857, close 1.3840

USDCAD is directionless inside a 1.3800-1.3900 band and that won’t change until Thursday and Friday’s US and Eurozone economic data. USDCAD is also being underpinned by the narrowing of CAD/US 10-year interest rate spreads which are -79.5 today compared to -84.4 a week ago.

WTI oil traded lower in a 62.98-63.45 range despite Trump’s 50% tariff on India as, according to Reuters, traders expect a significant inventory build up in Q4 and into 2026.

The US and Canadian economic calendars are empty.

USDCAD Technical Outlook:

The intraday technicals are slightly bullish above 1.3820 and looking for a break above 1.3890 to extend gains toward 1.3950. A break below 1.3820 targets 1.3780.

The medium-term picture is bearish while prices are below the 1.3920-50 range and looking for a retest of support at 1.3780, then 1.3710.

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

The Law of Diminishing Returns

Trump unleased more tariff threats on some and boosted tariffs on others. Markets reacted with a collective yawn. Yada yada yada-same crap, different day. The President’s 50% tariff on imports of goods from India came into effect today because India defied his order and bought Russian oil. The tariffs may take effect immediately but US importers will not be able to find alternative sources very quickly, which means American consumers will pay higher prices.

Trump is also threatening China with a 200% tariff if China doesn’t ensure shipments of permanent magnets reach the US.  Some one sounds desperate and it isn’t Xi Jinping.

Trump Fed

Donald Trump is attempting to remake the Fed so that he gains control and it is working. Fed Chair Powell turned dovish after months of insults and questions about his competence. Trump said he fired Governor Lisa Cook—she said he can’t do it and plans to sue. But the damage is done. The FOMC dynamics are less about economics and more about political party affiliation.

Taking Stock

Asian equity markets were rather dull. Japan’s Topix closed flat while Australia’s ASX 200 gained 0.28%. Hong Kong’s Hang Seng dropped 1.27% (mainly due to profit taking)

As of 5:30 am PDT, the French CAC-40 Index has gained 0.72% while the UK FTSE 100, the German DAX and S&P 500 futures are flat. The US 10-year Treasury yield is at 4.282%, Gold (XAUUSD) is 3380.89and the US Dollar Index (DXY) is 98.59

EURUSD

EURUSD drifted lower in a 1.1578-1.1651 range weighed down by French political drama, albeit in thin, end-of-summer markets. Trump is carving another notch in his tariff bazooka on news that the EU plans to remove all tariffs on US goods by the end of the week. The move may embolden Trump to follow through on his threat to impose “substantial” new tariffs on countries with digital taxes.

GBPUSD

GBPUSD traded poorly in a 1.3430-1.3486 range due to broad-US dollar strength That is a bit of a head-scratcher since most economists claim that Trump’s debasement of the Fed and its independence is a US dollar negative. However, that may be an issue for September.  The intraday GBPUSD technicals are bearish while below 1.3480 and looking for a test of 1.3410.

USDJPY

USDJPY was largely directionless in a 147.28-148.08 range as broad US dollar strength offset selling pressure from lower US Treasury yields and ongoing speculation for a Bank of Japan rate hike.

AUDUSD

AUDUSD is consolidating this week’s gains in a 0.6465-0.6505 range but is trading at its session low in NY. Hotter than expected Aussie inflation (actual 2.8% vs forecast 2.3% and June 1.9%) had little impact as the gain was due to higher electricity prices. General greenback strength and caution around Trump’s latest 200% tariff threat on China is contributing to the selling pressure.

USDMXN

USDMXN rose steadily overnight, climbing from 18.6529 to 18.7303 as the greenback recouped all of its losses following Powell’s dovish tilt, last Friday.

USDCNY

PBoC fix: 7.1108 vs exp. 7.1559 (Prev. 7.1188)

Shanghai Shenzhen CSI 300 fell 1.49% to 4386.13

China Industrial profits fall less than expected. (Actual -1.5% y/y vs June -4.3%).

USDCNY falls to lowest level since last November, undermined by ongoing Fed drama and the prospect for faster and deeper Fed rate cuts.

FX High, Low, Open

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