USDCAD open: 1.3833, overnight range 1.3783-1.3844, close 1.3764
USDCAD rallied on the back of fresh-American made negative risk sentiment and Prime Minister Carney’s decision to tell the US trade negotiators to take their trade demands and stick them where the sun doesn’t shine.
The Prime Ministered was miffed after the American’s kept making last minute changes and decided that American can not be trusted to honor any deal. Carney explained his reasoning here.
The US government blames Canada for the failure. They claim that at the very last minute, Canada demanded relief from tariffs on medium to heavy trucks like the Ford F-350, F-450, and F-550 and GM’s Silverado.
Think about it. Ford and GM are ground zero in the auto-tariff spat. Arguably they are as well-versed on auto tariffs as the US Treasury Secretary Lutnick and Trade Rep Greer.
Do you believe Ford would have committed to spending $5 billion to retool its Oakville plant to build those Trucks? Do you think GM would plan to spend around $350 million to retool for its next-generation Silverado 1500 trucks in Oshawa if tariffs existed?
The Washington Post documented over 30,000 false or misleading claims during Trump’s first run and the second Administration is on pace to top that.
Who would you believe?
Carney said Canada would match US tariffs dollar for dollar and they will go into effect on September 8, which also leaves room to restart them.
WIT oil prices traded sideways in a $84.71-$86.56 range. Bessent is planning to announce“ the greatest financial offensive ever marshalled” against Iran today. He is hoping it is a tad more successful then the Trump/Hegseth “Operation Epic Fury” which Trump said “is one of the largest, most complex, most overwhelming military offensives the world has ever seen. Nobody’s seen anything like it.” He was right. Failures of that magnitude are rare.
Iran is threatening to cut off all its oil exports and with the Strait of Hormuz still closed would drive WTI towards $100/b.
USDCAD Technicals
The intraday USDCAD technicals are bullish following the rebound from 1.3670 and are looking for a decisive break above the 1.3848 area where the 0.618 Fibonacci retracement and the 200-day moving average converge, which would target 1.3900.
USDCAD is also in a downtrend channel from the beginning of August and while prices are below 1.3870, the current rally is merely a correction.
Longer term, the USDCAD downtrend remains intact while prices are below the 100-day moving average at 1.3897 and the 0.5 Fibonacci retracement of the May-July range at 1.3921.
Friday’s plunge briefly sliced through the 0.786 retracement at 1.3728 before the anticipated short-covering bounce materialized, lifting prices back toward the 200-day moving average at 1.3847.
The daily RSI has recovered from its most oversold reading of the year to 43, but the MACD is still deep in negative territory, which suggests the rally is corrective rather than the start of a new uptrend.
A daily close above 1.3850 would extend the recovery to 1.3920, while a rejection reopens the downside toward 1.3728, then the Bollinger band bottom near 1.3690, with the May low of 1.3584 beyond.
For today, USDCAD support is at 1.3780 and 1.3730. Resistance is at 1.3860 and 1.3710.
Today’s expected range is 1.3780-1.3880
FX Heat Map
FX open high low 6:00 am
Huffing and Puffing and Blowing Hot Air
It would be hilarious if it wasn’t so economically damaging to the global economy. The Trump administration, after completely bungling its attack on Iran, is planning to unleash a series of financial and economic sanctions on Iran and any country that continues to support them. China supports Iran. So does Russia. It’s a safe bet that the threats do not apply to them. Iran shares a border with Pakistan and Afghanistan and neither one is a fan of America.
Bessent is looking foolish after his attempt to manipulate 10-30’s Treasury yields failed. His bond buyback was designed to signal confidence in the market and curb rising yields. It didn’t. The U.S. government is projected to issue over $2.1 trillion in new debt in fiscal 2026 just to cover the deficit. Buying back $4 billion while issuing trillions is mathematically incapable of moving the structural supply-demand balance.
Taking Stock
Asian markets closed mixed with Hong Kong’s Hang Seng dropping 1.89%, while Japan’s Topix rose 0.15% and Australia’s ASX 200 climbed 0.49%.
As of 5:30 Am, European bourses are flat to lower. The French CAC 40 is down 0.19% while the UK FTSE 100 and the German DAX are flat. S&P 500 futures are down 0.19%, the US 10-year yield is 4.704%, and gold is $4,6661.04.10.
EURUSD | Range 1.1660-1.1688
EURUSD drifted lower in sideways trading as the fresh bout of US-driven risk aversion and a lack of top tier economic data sapped trading enthusiasm. The downside is supported due to the negative reaction of global markets to Bessent’s attempt to manipulate Treasury yields. The EURUSD technicals are bullish above 1.1540 which is guarded by support at 1.1630.
GBPUSD | Range 1.3622-1.3656
GBPUSD direction was dictated by the same influences as EURUSD. However, it derived some lingering support from Friday’s better than expected August PMI data that signaled improved consumer confidence and stronger economic growth. The GBPUSD technicals are bullish above 1.3550 and looking for a decisive break above the 1.3670-80 area to extend gains to 1.3820.
USDJPY | Range 158.59-159.28
USDJPY has a modest bid stemming from firm oil prices and Treasury yields. However, the prospect of a BoJ rate hike and the elevated risk of BoJ intervention is capping gains.
AUDUSD | Range 0.7158-0.7177
AUDUSD consolidated Friday’s gains in a narrow band. The lingering stink from Bessent’s failed Treasury yield manipulation has put downward pressure on the pair while renewed risk aversion around Iran is limiting the topside.
USDMXN | Range 16.8956-16.9432
USDMXN is consolidating last week’s losses and remains in a downtrend 16.8500-16.9900 channel that has guided prices lower since the end of July. The downside is supported by diminished Fed rate hike concerns while Banxico has paused cutting its rates. Mexican GDP and inflation numbers are on tap.
CHINA
- PBoC Fix: 6.7841 vs exp. 6.7248 (prev. 6.7817)
- Shanghai Shenzhen CSI 300 fell 1.21% to 4,563.13
Chinese stocks fell on a mix of global “risk-off” sentiment and was exacerbated by the tech sector decline.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
