May 6, 2026

USDCAD open: 1.3590, overnight range 1.3578-1.3623, close 1.3620

Global markets have shifted into “risk on” mode following Trump’s tweet about Iran saying “Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran.” The risk sentiment shifted into high gear after Axios reported that both sides were close to signing a memorandum of understanding that would end the war in the region.

The US dollar dropped across the board on the news but the Canadian dollar gained the least. Canada has a lot of other issues, particularly the CUSMA trade talks which may be limiting USDCAD downside.

WTI oil prices dropped 11.4% overnight and are sitting at $90.94 in NY as traders bail out of long WTI positions. The WTI drop will get messy if it breaks below $86.50/b.

The news of a possible end to the US and Iran war will shift attention to Fed monetary policy. Today, the JOLTS job openings data report showed US firms added 109,000 jobs in April compared to 61,000 in May. That’s hardly evidence of a weakening job market and zero incentive for the Fed to cut interest rates.

USDCAD Technical Outlook

The intraday technicals are bearish while trading below 1.3630 and looking for a break of support at 1.3570 to extend losses to 1.3540. A break above 1.3630 negates the downside pressure while a move below 1.3540 targets further losses.

The daily downtrend from the April highs remains intact, with price now pressing against the rising trendline support drawn from the January lows which is around the 1.3550-60 zone. A descending channel has formed off the early April peak, with the upper boundary now capping rallies around 1.3640.

For today, USDCAD support is at 1.3560 and 1.3540. Resistance is at 1.3600 and 1.3630. Today’s range: 1.3550-1.3620.

FX Heat Map (6:00 am) one week

FX  open high low 6:00 am

The Pause that Refreshes

Trump took to TruthSocial to tweet: “Based on the request of Pakistan and other Countries, the tremendous Military Success that we have had during the Campaign against the Country of Iran and, additionally, the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran, we have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed. President DONALD J. TRUMP”

A risk on rally followed in its wake. Oil prices plunged, Equities soared and the greenback retreated.

The End of the War is Nigh

Around 4:30 am, Axios news reported that the US and Iran are closing in on a one-page “memorandum of understanding” to end the war and to set the framework for nuclear negotiations. That was music to the ears for markets. Gold prices surged, oil prices tanked, the US dollar dropped across the board and 10-year Treasury yields retreated from their peak.

That’s a rather aggressive reaction to a non-binding memo about hopes and wishes to set the stage for a nuclear agreement which will be the same or similar to the Obama nuclear treaty, which Trump tore up.

Taking Stock

A number of Asian countries returned from extended holidays and they bought stocks. Korea’s KOSPI broke the 7,000 level for the first time and closed at 7,384.56. Australia’s ASX 200 climbed 1.30%, Hong Kong’s Hang Seng rose 1.22% while Japan’s Topix was flat.

As of 5:30 am PT, European bourses are in full rally mode. The German DAX is up 2.13%, the French CAC 40 has risen 2.84% and the UK FTSE 100 has gained 2.22%, although all were higher earlier. S&P 500 futures are up 0.76%, the 10-year Treasury yield is 4.352%, the DXY is 97.90, and gold (XAUUSD) is 4,680.58.

EURUSD | Range: 1.1692-1.1797

EURUSD rallied on the heels of Trump’s tweet about pausing Operation Freedom because a deal was close and then extended the gains after the Axios report. Talk of ending the Iran war overshadowed poor eurozone Composite and Services PMI data (Composite 48.8 vs March 50.7, and Services 47.6 vs 50.2 in March). Chris Williamson, Chief Business Economist at S&P Global wrote “The final eurozone PMI data confirm the earlier signs of an economy slipping into decline during April as the ongoing war in the Middle East derails the recovery.” Eurozone PPI rose 3.4% in March (forecast 3.3%)

GBPUSD | Range: 1.3539-1.3644

GBPUSD rose on the latest “peace in our time” sentiment which fuelled a new “risk on” rally and drove the US dollar lower. However, political concerns may temper GBPUSD gains as Prime Minister Starmer’s government is expected to lose a number of ridings in local elections, raising questions about the durability of his tenure.

USDJPY | Range: 155.04-157.94

USDJPY drifted aimlessly in early Asia markets until the heavy hand of the BoJ disrupted the tranquility. Unconfirmed, but likely, BoJ intervention drove USDJPY from its peak to the session low in minutes and prices are consolidating the losses in early NY trading. Improved global risk sentiment is also weighing on the currency pair.

AUDUSD | Range: 0.7178-0.7278

AUDUSD joined the risk-on rally and got an added lift from Tuesday’s RBA rate hike. AUDUSD is also supported by the latest Australia-Japan agreement to strengthen cooperation around defence, energy and critical minerals.

USDMXN | Range: 17.1951-17.3832

Mexican markets have reopened following Cinco de Mayo in an optimistic mood. News about a possible Iran and US peace deal fuelled a global “risk on” rally and USDMXN plunged to just above pre-war levels. USDMXN technicals are bearish while below 17.5700.

China

USDCNY Fix:  6.8562 (previous 6.8628)

Shanghai Shenzhen CSI 300 rallied 1.45% to 4,877.09.

RatingDog Services PMI (compiled by S&P Global) 52.6 vs 52.1 in March.

Chinese equity traders return from holiday and buy tech stocks. Foreign Minister Wang Yi is holding talks with Iran’s Abbas Araghchi about a comprehensive ceasefire.

The PBoC  is continuing to support the market, with plans to inject 300 billion CNY via reverse repos.

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