August 4, 2025
USDCAD open: 1.4036, Range (since Fri.) 1.3996-1.4066, Fri. close 1.4022, Mon. close 1.4047
USDCAD trickled higher Monday and again after the NY open due to conflicting US/Iran reports and sliding oil prices. Trump insists that a Strait of Hormuz resolution is close while Iran keeps firing missiles and drones at ships and neighbors.
WTI traded in a 79.66-82.32 range and prices are hovering around $80.00/b in NY.
Price action is dancing to US/Iran headlines, and the current level suggest traders are still hopeful for another ceasefire. Oil companies, not so much. Saudi Aramco’s profit rose 33%, BP announced a $7.5 billion surge in profits and rump is chirping about excessive profits made by Exxon and Chevron.
Canada June trade surplus is $3.86 billion (forecast $3.0 billion, May $4.24 b)
US Trade Balance data was little changed at 73.3 b (previous -$77.6 billion), Still to come, JOLTS Job Openings (forecast 7.4 million, down from 7.594 million) and Factory Orders.
USDCAD Technicals
The intraday USDCAD technicals are slightly bearish while capped below 1.4070. A decisive break below 1.4020 targets the 1.3990-1.4000 support zone. A topside break suggests a retest of the 1.4110 area.
The longer term USDCAD techncials are bullish inside the 1.3860-1.4460 range that has contained price action since February. The 100-day moving average, last pegged near 1.3900, remains the magnet on a sustained break below 1.3980.
For today, USDCAD support is at 1.4020 and 1.3990. Resistance is at 1.4070 and 1.40900.
Today’s expected range is 1.4020-1.4080
FX Heat Map
FX open high low 6:00 am
On, Off, On, Off and It Goes On.
Trump’s Iran war has had more stops and starts than rush hour traffic in a construction zone. Trump is demanding Iran reach a deal today or face “decapitation.” Iran’s answer was to strike a US base in Kuwait with three drones overnight. There is another report that a cargo vessel was hit by an unidentified projectile northeast of Oman’s Al Khasab. Oil responded, rising 3.7%.
Tariff drama never ceases. Half of the states in the US have filed a lawsuit in the US Court of International Trade in Manhattan accusing Trump and US officials of unlawfully using Section 301 of the Trade Act of 1974 to replace earlier tariffs that were either struck down by the US Supreme Court or expired.
Equity Traders Care Only About Earnings
US equities rallied hard Monday, led by the Nasdaq, as lower yields and Trump’s decision to stand down from a broader Iran strike lifted risk appetite. FX traders stayed close to home partly because it is US employment data week with NFP due Friday. Analysts will be perusing the inflation components of this week’s jobs-related data.
Taking Stock
Asian markets were mixed and failed to sustain Wall Street’s momentum. Australia’s ASX 200 rallied 1.40%, Japan’s Topix was flat and Hong Kong’s Hang Seng fell 0.60%.
As of 7:30 am, European bourses are higher. The German DAX is up 0.65%, the UK FTSE 100 has gained 0.64% and the French CAC 40 is up 0.12%. S&P 500 futures have climbed 0.23%, the 10-year Treasury yield is 4.688%, the DXY is 99.93 and gold is $4,062.42.
EURUSD | Range (from Friday close) 1.1501-1.1562
EURUSD peaked yesterday then dropped following yesterday’s better than expected US ISM Manufacturing PMI, which rose to 55.6 (forecast 54, previous 53.3). The data reinforces the “US economic resilience” story while suggesting the economy can handle a rate increase. Prices traded narrowly today with traders awaiting Trump’s response to Iran’s latest actions.
GBPUSD | Range (from Friday close) 1.3417-1.3508
Sterling dropped steadily yesterday on the heels of the more robust than expected US ISM data while ignoring its own encouraging S&P Manufacturing PMI report. PMI was 51.9 in July (June’s 52.8). The headline PMI has remained above 50.0 for nine consecutive months. The latest Iran attacks weighed on prices overnight and GBPUSD traded in a narrow band.
USDJPY | Range (from Friday close) 155.23-157.96
USDJPY is in its own world. The lingering impact from the Japanese Finance Ministry and US Treasury’s intervention to boost the value of the yen contained price action overnight. Arguably, the nearly 10-big figure drop is a result; however, it does nothing to change the JGB/US Treasury yield differential except to provide punters with better levels to enter the carry trade. Monday, Japan PMI ticked down to 54.5 from 54.7.
AUDUSD | Range (from Friday close) 0.6983-0.7051
AUDUSD traders were on holiday on Monday, then started their week buying AUDUSD and managed to claw back a good chunk of the losses today.
USDMXN | Range (from Friday close) 17.2906-17.3644
USDMXN traded sideways and is trading near its session low in hopes that the US and Iran reach another ceasefire agreement. Prices are also weighed down after Mexican analysts downgraded their forecasts for 2026 inflation to 4.0% from 4.2% while raising their outlook for GDP to 1.2% from 1.1%.
CHINA
- PBoC Fix: 6.7917 vs exp. 6.7595 (prev. 6.7898)
- Shanghai Shenzhen CSI 300 rose 0.25% to 4,588.20 (down 7.44% for July)
China’s manufacturing sector slowed in July, with the RatingDog PMI falling to 50.9 from 51.7 in June, missing expectations and marking a four-month low. Though still above the 50.0 expansion threshold, output growth softened, new orders eased, and purchasing activity contracted for the first time since November 2025.
The PBOC reaffirmed a moderately loose monetary policy and pledged to support foreign panda bond issuances, while the HK exchange launched 5-year China government bond futures to hedge RMB interest rate risk.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
