September 29, 2025

USDCAD open 1.3922, overnight range 1.3916-1.3948, close, 1.3942

USDCAD is consolidating last weeks losses with Friday’s slightly better than expected July GDP data providing modest downward pressure. Canada may avoid a recession for now but with growth just 0.2% m/m the economy is barely treading water.

Canada doesn’t have much in the way of market-moving data on the slate this week leaving USDCAD direction at the mercy of US data and politics.

WTI oil is at the bottom of its 64.36-65.40 range due to renewed oil flows from Iranq and speculation that Opec will announce another production increase in November.

The Canadian economic calendar is empty.

USDCAD Technical Outlook:

The intraday technicals are unchanged from Friday.  They are bullish while trading above 1.3895 and are looking for a sustained break above 1.3951 (the 61.8% retracement of the 2024/2025, 1.3308-1.4630 range) to target the 200-day moving average at 1.3998. However, the momentum indicators are screaming “overbought” and a reversal to 1 the 1.3880-1.3900 area is likely.

The medium-term technicals are bullish with a bullish channel intact since July. A break below 1.3860 suggest a drop to the bottom of the channel at 1.3750

For today, USDCAD support is 1.3910 and 1.3870. Resistance is 1.3970 and 1.4020. Today’s Range: 1.3910-1.4010

Budget Brinkmanship-Trump Typing Lay-off Notices

The annual US budget drama comes to a head on Wednesday if Congress doesn’t approve Trump’s budget. The Republicans may control the Senate, but they only have 53 seats and they need at least 60 votes to pass a major spending bill. Trump is threatening to permanently lay off “thousands” of government workers if Democrats do not cave into his budget demands.
FX traders were ambivalent on the news but gold (XAUUSD) surged to 3819.80 from 3760.24 on the drama.

Slow Monday Kicks off Busy Week

The US economic calendar is empty today leaving budget headlines and Fed-speak to drive FX direction. Cleveland Fed President Beth Hammack sounded cautious today when she told CNBC that “it was a challenging time for monetary policy” and that headline and core inflation had upward pressure. St. Louis Fed President Alberto Musalem, NY Fed President John Williams, and Atlanta Fed President Raphael Bostic are speaking later today.
This week is all about employment data since Fed Chair Powell’s attention is on the job market. Friday is nonfarm payrolls day and it is forecast to show a gain of 39,000 jobs. Prior to that release is ADP employment, Challenger job cuts, and weekly jobless claims. However, traders still need to get past month and quarter end on Tuesday.

Taking Stock

Asian equity indexes were higher except for Japan’s TOPIX which lost 1.74% ahead of next weekend’s LDP elections. Australia’s ASX 200 gained 0.85% and the Hong Kong Hang Seng index jumped 1.89%.

As of 5:30 am PDT, European equity indexes are mixed to higher. The German DAX is down 0.10% while the French CAC-40 index has gained 0.26% and the UK FTSE 100 index has risen by 0.43%.. S&P 500 futures have gained 0.48%. The U.S. dollar index (DXY) is 98.00, gold (XAUUSD) is 3818.25 and the U.S. 10-year Treasury yield sits at 4.155%.

EURUSD

EURUSD traded uneventfully in a 1.1700-1.1734 range. Traders mostly ignored the Economic Sentiment Indicator (actual 95.5 vs previous 95.3), industrial confidence, and services sentiment as the results were little changed and remained cautious due to French politics.

GBPUSD

GBPUSD rose from 1.3396 to 1.3451 with traders keeping a wary eye on UK budget talks as the Labour Party conference is in full swing. Concerns that fresh government spending would trash the gilt market are limiting gains.

USDJPY

USDJPY dropped from 149.55 to 148.47 in part, due to safe haven demand for yen because of the US government shutdown risks and last week’s rise in US Treasury yields. The upcoming LDP elections on the weekend are limiting the downside.

AUDUSD

AUDUSD rose from 0.6546 to 0.6574 due to optimism around further Fed rate cuts and the belief that the RBA will leave rates unchanged at 3.60% tomorrow.

USDMXN

USDMXN is in the middle of its 18.3171-18.4001 range due to Banxico and Fed interest rate outlooks. Meanwhile, China has opened anti-dumping and trade barrier probes into Mexico after the Mexicans talked about higher tariffs for China—its second largest trading partner.

USDCNY

PBoC fix: 7.1089 vs exp. 7.1258 (prev. 7.1152)
Shanghai Shenzhen CSI 300 rose 1.54% to 4620.05
China will hold a meeting to discuss its next 5-year plan October 20-23 in Beijing. Goldman Sachs analysts are forecasting PBoC rate cuts in Q4.

FX High, Low, Open

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