USDCAD open: 1.3872, overnight range 1.3864-1.3908, close 1.3899
USDCAD drifted lower along with almost all of the G-7 majors as Treasury yields retreated ahead of the July 29 FOMC meeting minutes released today.
Trump’s 50% tariff deadline came and went and guess what? -He paused it until the end of the day on August 21.
Trump trumped the news on the White House website “TEMPORARY SUSPENSION OF ADDITIONAL DUTIES TO OFFSET CANADIAN DISCRIMINATION AGAINST THE COMMERCE OF THE UNITED STATES WITH RESPECT TO ALCOHOLIC BEVERAGES, DAIRY, AND MOTOR VEHICLES,” and tweeted about it on Truth Social “I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL! The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave! Thank you for your attention to this matter. President DONALD J. TRUMP.”
The reality is that Trump is touting a three-day pause as a win even though it is merely the seventh inning stretch at a tied baseball game.
Moving on to other things that Trump screwed up. WTI oil is steady but with a bid in a 84.27-85.41. Trump said the US is not talking to Iran which Iran has claimed has always been the case. Trump posted a picture of the Strait of Hormuz as a new US territory so the question is “Why has America closed the Strait?
There are no US or Canadian top tier economic reports on tap today.
USDCAD Technicals
The intraday USDCAD technicals are bearish while prices trade below the downtrend line from the August peak, currently around 1.3910, and are looking for a break below 1.3840, to extend losses toward support at 1.380. A move above 1.3910 targets 1.3950.
Longer term, USDCAD is trading below the 100-day moving average at 1.3920 and is looking to retest the 200-day moving average at 1.3852. A decisive break below that level would shift the focus to the bottom of the Bollinger band at 1.3794.
In the bigger picture, USDCAD remains above the uptrend line from the 2012 low, currently near 1.3600, which suggests the decline from 1.4696, a level that capped rallies in 2016, 2020, and 2025, is corrective rather than the start of a trend reversal.
For today, USDCAD support is at 1.3840 and 1.3820. Resistance is at 1.3910 and 1.3950.
Today’s expected range is 1.3840-1.3920.
In the bigger picture, USDCAD remains above the uptrend line from the 2012 low, currently near 1.3600, which suggests the decline from 1.4696, a level that capped rallies in 2016, 2020, and 2025, is corrective rather than the start of a trend reversal.
FX Heat Map
FX open high low 6:00 am
Market Snoozefest
Geopolitics remain in a state of flux. The Russia/Ukraine war has no end in sight. Israel continues to attack Lebanon and Hamas while Iran hunkers down for the long haul in its defense of Trump. Central banks are fighting inflation and are pencilling in rate hikes, and US Treasury yields are elevated. None of the above is new, which explains a lack of action in global markets overnight.
The FOMC minutes are due but unlikely to cause a stir. The spate of soft US data in August has overshadowed any discussions about the need for higher rates, making the information rather stale.
Taking Stock
Asian markets closed with losses except for the Hong Kong Hang Seng, which ended unchanged. Japan’s Topix dropped 3.09% and Australia’s ASX 200 fell 0.18%.
As of 7:00 am, European bourses are in the red except for the French CAC-40, which is up 0.32%. The UK FTSE 100 is down 0.25% and the German DAX is down 0.11%. S&P 500 futures are unchanged, the US 10-year yield has dipped to 4.694%, the DXY is 99.36, and gold is $4,366.83.
EURUSD | Range 1.1570-1.1612
EURUSD ticked higher overnight supported by a generally soft US dollar, and yesterday’s hawkish comments by ECB Chief Economist Philip Lane reminded traders that Eurozone inflation at 3.0% is still too high. Headline July inflation was 2.9% as expected. Core Harmonized Index of Consumer Prices (HICP) rose 2.5% y/y. The short-term EURUSD technicals are bullish above 1.1520 and looking for a break above 1.1620 to extend gains to 1.1690.
GBPUSD | Range 1.3523-1.3566
GBPUSD drifted higher on the back of a soft greenback and higher July inflation. CPI rose to 2.9% y/y (June 2.6%) and retail prices rose 0.6% compared to 0.3% in June, mainly due to higher energy costs. GBPUSD technicals are bullish above 1.3470 and looking for a sustained move above 1.3610.
USDJPY | Range 159.00-159.64
USDJPY is at its session low in early NY mainly because US Treasury yields have ticked lower and because of caution ahead of today’s FOMC minutes. The ever-present risk of BoJ FX intervention is helping to cap gains.
AUDUSD | Range 0.7067-0.7090
AUDUSD traders took note of Asian market equity weakness and banked some profits. However, the slide stalled at the base of the August uptrend line, which is reinforced by the RBA’s hawkish outlook. Traders are awaiting tomorrow’s domestic employment report with 15,000 jobs expected to be added, compared to 75,000 last month.
USDMXN | Range 17.0279-17.0698
USDMXN is trading at its session low. Prices continue to be pressured by downgraded odds of a Fed rate hike. US-Mexico trade talks continue with Mexico reportedly open to imposing further trade restrictions on China to appease Trump.
CHINA
- PBoC Fix: Â 6.7854 vs exp. 6.7421 (prev. 6.7905)
- Shanghai Shenzhen CSI 300 fell 2.90% to 4,588.70
Chines stocks were hit by a rash of selling because of disappointing corporate earnings, a sell-off in tech stocks and ongoing fears of a global economic slowdown.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
