February 6, 2026

USDCAD open: 1.3649, overnight range 1.3605-1.3675, close 1.3679

USDCAD dropped because of widespread US dollar selling against the majors, sparked by China telling its domestic banks to reduce US Treasury holdings. That fueled fresh dollar debasement chatter and helped to lift US Treasury yields.

Canada’s jobs data, released Friday, is nothing to get excited about. That’s because the Bank of Canada believes that job losses are structural due to the resetting of Canada and US trade and nothing that monetary policy can fix.

WTI oil prices churned in a 62.63–63.89 band after Iran balked at the US demand to halt its uranium enrichment program. The talks ended without a deal, but Trump said more talks are planned.

There are plenty of Fed speakers on tap today, but no top-tier US or Canadian data.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while prices are below 1.3675, and looking for a break below 1.3590 to target 1. 3550.. and a break lower opening 1.3580. A move back above 1.3675 would test resistance at 1.3620.

The medium-term technicals suggest that the recent rally is a correction and, while prices are below 1.3770, a break below 1.3620 targets 1.3480.

For today, USDCAD support is at 1.3590 and 1.3550. Resistance is at 1.3660 and 1.3720.

Today’s Range: 1.3570–1.36

Defensive Dollar ahead of Data-Filled Week.

The US dollar extended Friday’s drop in Asia, then attempted to claw back some losses into the NY opening. The losses were sparked after China, under the guise of prudent risk management, urged domestic banks to reduce US Treasury exposure. The move is meant to show the American government that Beijing is unhappy with America’s plans to ship weapons to Taiwan.

The nonfarm payrolls report that was due last Friday will be released on Wednesday and is expected to rise to 70,000 from 50,000. Forecasts are all over the map because of a slew of weak employment data recently. In addition, the US releases Retail Sales, ADP employment, and inflation data.

Taking Stock

Asian equities soared thanks to the steep rebound in US tech stocks on Friday. A landslide election victory by Japan’s PM Takaichi’s party lit a fire under Japanese stocks. The Nikkei soared by 3.89% and the Topix climbed 2.29%. Australia’s ASX 200 recouped almost all of Friday’s losses with a 1.83% gain, while Hong Kong’s Hang Seng rose 1.76%.

As of 7:15 am, European bourses are mostly positive. The German DAX has gained 0.39%, while the UK FTSE 100 and the French CAC 40 are flat. S&P 500 futures are down 0.18%, and the US Dollar Index is at 97.25, just above its session low of 97.25. The 10-year Treasury yield is 4.226%, and gold (XAUUSD) is 5014.74.

EURUSD

EURUSD extended Friday’s rally in a 1.1810–1.1870 range. EURUSD is underpinned by divergent Fed and ECB monetary policy outlooks and by euro demand due to a narrative about US diversification. The intraday EURUSD technicals are bullish above 1.1790 and looking for a retest of 1.2050.

GBPUSD

GBPUSD rose from 1.3587 to 1.36298, albeit rather reluctantly because of a brewing storm at Number 10 Downing Street. Prime Minister Starmer appointed Peter Mandelson as UK Ambassador to the US, despite knowing he was a pal of Jeffrey Epstein. Yesterday, Starmer’s chief of staff, Morgan McSweeney, quit and raised fears that Starmer’s job was at risk. That news raised Gilt yields, which were already rising after the Japanese election news.

USDJPY

USDJPY soared and sank in a 156.22–157.66 range on the heels of the Japanese election. Prime Minister Sanae Takaichi’s party secured a landslide victory. She promised to suspend the 8% food tax for two years and said she would not issue new debt to fund it. JGB yields soared, with the 10-year rising from 2.17% to 2.29%.

AUDUSD

AUDUSD traded higher in a 0.7010–0.7046 range, supported by broad US dollar weakness and the prospect of another RBA rate hike. That rate hike is occurring even as other central banks are still easing. The Fed is expected to cut its benchmark rate by June, the Bank of England to cut in March, while the ECB and Bank of Canada are on hold.

USDMXN

USDMXN traded defensively in a 17.2263–17.2819 range. The currency pair shrugged off a decline in Consumer Confidence (actual 44.3 in January vs 44.8 in December) and benefitted from Banxico suggesting rate cuts would be paused, as well as from broad US dollar weakness.

China

PBoC Fix: 6.9523 vs exp. 6.9334 (Prev. 6.9590)

Shanghai Shenzhen CSI 300 rose 1.63% to 4719.06

China sentenced British citizen Jimmy Lai to 20 years in jail because he used his media outlets to criticize the Chinese government. The UK government was not amused and waggled a collective finger in a very stern manner to show their displeasure.

China reportedly told domestic banks to limit purchases of UIS Treasuries which is probably related to the US granting approval for Taiwan to purchase $2.0 billion in weapons.   

FX  open high low

FX Heat Map (6:00 am) one week

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