August 5, 2025
USDCAD open: 1.4065, overnight range 1.4042-1.4080. close 1.4062
USDCAD went nowhere overnight while hanging on to a bid due to lower oil prices and widening CAD/US interest rate spreads in favour of the US dollar. Prices fell to the session low after todays JOLTS report.
WTI traded in a 74.23-76.40 range and prices are hovering around $76.00/b in NY, up roughly 0.7% on the session.
Canada and US trade talks are heating up. The Globe and Mail reports that Canada may be willing to cap metals shipments in return for a lower tariff than the 50% currently in place. The American’s also want improved access to the dairy industry and an end to the bans on alcohol imports by 8 of 10 provinces.
WTI oil traded in a 74.23-76.70 range. Axios reported Washington is seeking an agreement that would route inbound Gulf traffic through Iranian waters and outbound traffic through Omani waters for 60 days. Before Trump’s war: no Hormuz tolls.
After Trump’s war: Washington is negotiating to restore… no Hormuz tolls. America is winning!!
Today’s US data includes ISM Services PMI. The Canadian calendar is empty.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.4040 and looking to break above 1.4090 to target 1.4130. A break below 1.4040 puts 1.4000 in play.
The USDCAD downtrend from July’s 1.4240 peak continues to contain the upside but a decisive break above 1.4100, would negate the downtrend and shift the focus to 1.4250. The 100-day moving average, at 1.3900, remains the magnet on a sustained break below 1.3960.
For today, USDCAD support is at 1.4040 and 1.4100. Resistance is at 1.4090 and 1.4120.
Today’s expected range is 1.4010-1.4110.
FX Heat Map
FX open high low 6:00 am
US Labour Market Cooling
Todays ADP employment report was sharply weaker than expected, adding just 44,000 jobs in July compared to the forecast of 70,000 and 98,000 in June. The data supports calls for the Fed to leave rates unchanged. The US dollar retreated on the news.
Eternal Optimists
Equity traders tend to hear what they want to hear, despite the source as was evident yesterday and overnight. Wall Street soared with the S&P 500 closing at a new record high and the NASDAQ closing toward its June peak. The gains were fueled by surging tech earnings but renewed hopes for a US and Iran deal. Treasury Secretary Bessent spoke about how a deal to reopen the Strait of Hormuz was close, despite the Trump Administration’s demonstrated lack of understanding of what constitutes a deal.
Oil prices fell on the news but have since clawed back some losses while the US dollar index traded close to flat.
Yesterday’s JOLTS and Factory orders data pointed to a modest cooling of the US economy which gives Fed doves some more ammunition.
Taking Stock
Asian markets followed Wall Street’s lead. Japan’s Topix soared 2.13%, Australia’s ASX 200 rose 0.90%, and Hong Kong’s Hang Seng gained 0.24%.
As of 5:20 am, the German DAX and French CAC-40 are flat while the UK FTSE 100 has gained 0.24%. S&P 500 futures are up 0.41%, the 10-year Treasury yield is 4.607%, the DXY is 99.69 and gold is $4,207.62.
EURUSD | Range 1.1527-1.1557
EURUSD traded sideways despite firmer Eurozone data and falling energy prices. Final July Services PMI was revised up to 51.7, confirming a return to expansion, while lower producer prices pointed to easing inflation pressures. The real driver, however, was broad U.S. dollar weakness on improved risk sentiment with yesterday’s US JOLTS and factory orders data providing an assist.
GBPUSD | Range 1.3444-1.3484
Sterling is drifting near the top of its overnight band with prices getting a bit of support from the UK Services PMI report for July (actual 52.1, June 48.8). It is the first expansion in three months, and it was driven by stronger consumer spending and technology demand. Unfortunately, employment fell for the 22nd consecutive month which put a damper on the enthusiasm.
USDJPY | Range 157.31-157.88
USDJPY ticked higher as the drama from the joint Japan and US intervention faded. The gains suggest that speculators (and carry traders) remain unconvinced intervention alone can hold the line. Traders ignored the hawkish bias evident in the BoJ minutes and the fresh optimism around Iran and the US.
AUDUSD | Range 0.7040-0.7056
AUDUSD traded with a bid, supported by a broad US dollar weakness and a broader risk-on mood fuelled by hopes of a U.S.-Iran breakthrough. Stronger Australian PMI data (Composite 53.2 vs forecast 52.6 and Services 53.6 vs forecast 53) suggested Australian growth may be getting some traction.
USDMXN | Range 17.2094-17.2728
USDMXN is traded with a negative bias due to the broader dollar retreat, due to lower oil and a friendlier risk environment.
CHINA
- PBoC Fix: 6.7889 vs exp. 6.7480 (prev. 6.7917)
- Shanghai Shenzhen CSI 300 rose 1.24% to 4,658.16
RatingDog Services PMI for July was 50.4 (forecast 53.7, June 54.1).
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
