December 10, 2025

USDCAD open: 1.3853, overnight range 1.3844-1.3859, close 1.3845

USDCAD traded quietly in an uneventful overnight session ahead of the Bank of Canada and Fed monetary policy decisions. The BoC is widely expected to leave its benchmark rate unchanged and suggests that the risks are tilted higher.

CAD/US 10-year yield spreads have continued to narrow this week and are -73.8 today in favour of the US. They were -94.1 a month ago.

WTI oil prices are trading with a bearish bias in a 58.09-58.65 band. Prices continue to be pressured by fears of an oil glut lasting until mid 2026 and expectations of a US rate cut.

USDCAD trading will be quiet until the BoC meeting. Any reaction to the announcement will quickly fade until the FOMC statement.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish below 1.3890 and looking for break below support in the  support in the 1.3810-1.3830  area to extend losses to 1.3760.  A break above 1.3890 followed by a move above 1.3920 points to further 1.3800-1.4000 consolidation.

The medium-term technicals are bearish supported by the breach of the 100 and 200-day moving averages but oversold RSI suggests waning momentum.

For today, USDCAD support is at 1.3810 and 1.3790. Resistance is at 1.3890 and 1.3920
Todays Range 1.3810-1.3910.

Going Dotty

Todays FOMC decision appears to be a foregone conclusion. A 25 bps rate cut is baked in but the Summary of Rate Projections is creating unease. The consensus is for a hawkish cut while raising the bar for further easing. The WSJ notes that up to 5 voting members do not see an overwhelming need to trim the benchmark.

Trump’s reported favourite person to succeed Fed Chair Powell is NEC Director Kevin Hassett. He agrees with Trump that rates should be cut but claims he came to the decision on his own.

Bond traders appear to be betting that todays rate cut may be the last for a while. In addition, some analysts suggest that investors are building a risk premium into the price of Treasuries as they are concerned about the neutrality of the Fed.

Taking Stock

Asian equity markets traded quietly. Japan’s Topix rose 0.12% while Australia’s ASX 200 lost 0.08%. Hong Kong’s Hang Seng gained 0.42%.

As of 5:30 am PT,  European bourses are underwater except the UK FTSE 100 which is up 0.37%. The German DAX has lost 0.52% and the French CAC-40 is down 0.24%. S&P 500 futures have risen by 0.11%,  the US Dollar Index (Y) is 99.16, the US 10-year Treasury yield is 41963%, and gold (XAUUSD) is 4197.60

EURUSD

EURUSD drifted in a 1.1622-1.1658 range ahead of today’s FOMC meeting. Traders breathed a sigh of relief after France passed its “social security budget,” enabling the government of Prime Minister Sebastien Lecornu to remain in power.

GBPUSD

GBPUSD bounced in a quiet 1.3296-1.3327 band with traders mostly sidelined ahead of todays FOMC meeting. Traders are also awaiting comments from Governor Andrew Bailey later today.

USDJPY

USDJPY traded with a bullish bias in a 156.56-156.94 range supported by higher US Treasury yields which overshadowed the likelihood of a BoJ rate increase on December 19. The US 10-year Treasury yield rose to 4.212% from 4.18% overnight.

AUDUSD

AUDUSD consolidated its recent gains in a 0.6629-0.6654 range. Prices were underpinned by Chinese data and by the RBA’s hawkish hold this week. Traders are also awaiting tomorrows employment report which is expected to show jobs increased by 20,000 in November (previous 42,000).

USDMXN

USDMXN traded in a 18.1876-18.2124 range and remains under pressure due to wide Mexican and US interest rate differentials. However, USDMXN rebounded from the low when US Treasury yields rose.

China

PBoC Fix: 7.0753  (Prev. 7.0773)

Shanghai Shenzhen CSI 300 fell 0.14% to 4591.83

November CPI rose 0.7% y/y as expected and up from 0.2% in October.  Producer Prices fell 2.2% y/y (forecast -2.0, and -2.1% in October.

IMF raises China GDP forecast to 5.0% for 2025 and forecasts 4.5% growth in 2026. Both guesses were upwardly revised from October.

FX High, Low, Open

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