May 15, 2026
USDCAD open: 1.3754, overnight range 1.3715-1.3759, close 1.3707
USDCAD rallied overnight as global risk sentiment soured. Trump’s China tour was hardly a resounding success which suggest Trump needs to refocus on Iran. The prolonged closure of the Strait of Hormuz is driving US inflation higher, even as US retail sales appear resilient. The prospect of a Fed rate hike has lifted the 10-year Treasury yield to 4.531% and the 2-year yield to a peak of 4.069% overnight.
Prime Minister Carney’s “climate-change warrior” colors are emerging once again. He sounds like he is aggressively promoting pipelines and Canada’s oil industry then tosses in a massively expensive carbon-capture project as a condition of approval. That nonsense is hardly investor friendly.
WTI oil prices climbed from 99.41 yesterday to 105.31 overnight, before dropping to 103.17 in NY. The surge is because markets expect Trump to renew military action against Iran.
There is only second tier Canadian economic data today and the locals will be looking for an early start to the first long weekend of the summer. US Industrial production is expected at 0.3% in April, compared to -0.5% in March.
USDCAD Technical Outlook
The intraday technicals are bullish while trading above 1.3680, targeting a break above 1.3760 to extend gains toward 1.3790. Failure to break decisively above 1.3760 shifts the focus to 1.3680.
The longer-term technicals are bullish and looking for further gains to the 1.3800 level. That may be difficult in the short term due to resistance from the upper 3-standard deviation Bollinger band at 1.3790 momentum indicators near extreme over bought levels.
For today, USDCAD support is at 1.3720 and 1.3680. Resistance is at 1.3760 and 1.3790. Today’s range: 1.3690-1.3790.
FX Heat FX open high low 6:00 am
FX open high low 6:00 am
All Hype, No Substance
Trump has left China and his spin doctors are already hailing the visit as a victory, despite very little getting accomplished. Trump and Xi Jinping occupy different realities. Jinping described America as being a declining nation. Trump heard. “America suffered tremendous damage during the four years of Sleepy Joe Biden.”
Trump secured a lot of “frameworks,” agreements on “strategic stability” of which there are no details, and a signal that China may buy more US oil.
The lack of success is a major reason markets soured on risk sentiment. The prolonged closure of the Strait of Hormuz has fueled inflation increases around the globe and in the US and Americans are unhappy. Trump will be forced to refocus his efforts to reopening the Strait of Hormuz which suggests an escalation in hostilities.
Bond Boys Beat on Bonds
Global bond markets have taken a beating. Yields in the EU, UK and the US are higher due to fears of a Fed rate hike, and deteriorating US fiscal conditions. UK Gilt yields rose over political worries about Keir Starmer’s longevity as Prime Minister. 30-year French and German bond yields climbed to 10-year peaks.
It’s a risk averse world today. The US dollar has surged across the board after traders were unimpressed with Trump’s China tour, and because of rising US inflation increasing the risk of a Fed rate hike.
Taking Stock
Asian equities closed in the red. Australia’s ASX 200 fell 0.11%, Japan’s Topix dropped 0.39% and Hong Kong’s Hang Seng is down 1.62%.
As of 5:30 am PT, the German DAX is down 1.96%, the UK FTSE 100 has lost 1.92% and the French CAC 40 has dropped 1.61%. S&P 500 futures have lost 1.13%, the 10-year Treasury yield is over 0.10 bps higher than yesterday morning at 4.555%. The DXY is 99.20 and gold (XAUUSD) is 4,561.25.
EURUSD | Range: 1.1617-1.1721
EURUSD traders bailed on long EUR positions when prices fell through support from the uptrend that began at the end of March. A sustained break below 1.1670 opens the door to further losses to 1.1410, the March 13 low. The sell-off was exacerbated by widening EURUSD 2-year interest rate differentials and the increase in risk off sentiment.
GBPUSD | Range: 1.3329-1.3409
GBPUSD got hammered by rising global risk aversion and increased angst around UK politics. Traders reacted to the possibility that a former lefty Birmingham mayor, Andy Burnham would challenge Starmer for the leadership of the Labour party. The move is a tad premature as Burnham doesn’t even have a seat in parliament.
USDJPY | Range: 158.27-158.68
USDJPY caught a bid due to broad US dollar strength, rising US treasury yields and higher oil prices. Those external forces make it very difficult for the BoJ to justify intervening to boost the yen while the risk of an economic downturn reduces the risk for BoJ tightening.
AUDUSD | Range: 0.7237-0.7265
AUDUSD rallied for all the same reasons as the other major currencies with the gains fueled by rising global bond yields.
USDMXN | Range: 17.2117-17.4028
USDMXN traded higher due to widespread US dollar demand and concerns about a prolonged Strait of Hormuz closure. The increase in US Treasury yields eroded Mexican peso support from Banxico/US interest rate spreads. However, if USDMXN is unable to decisively break above 17.4600, the move is merely a correction and the downtrend from the beginning of April remains intact.
China
- USDCNY Fix: 6.8415 vs exp. 6.7976 (prev. 6.8401)
- Shanghai Shenzhen CSI 300 fell 1.12% to 4,859.59
Escalating geopolitical tensions on the heels of Xi Jinping’s warning to Trump about “mishandling Taiwan” and a tech stock retreat fueled drove Chinese stocks down.
China’s response to US request for help with Iran. “This conflict, which should never have happened, has no reason to continue.”
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
