USDCAD open: 1.3885 overnight range 1.3873-1.3891, close 1.3879
USDCAD churned in a narrow band as traders focused on the Fed’s interest rate outlook and anticipation ahead of Fed chair Kevin Warsh’s speech from Jackson Hole, Friday.
Markets are really hoping that Mr Warsh sheds some light on monetary policy but why would he? He has complained that forward guidance can hamper the Fed’s ability to react to changing market dynamics. Furthermore, he is on record for complaining that Fed officials talk too much.
The US and Canada trade spat has devolved into a bench-clearing brawl. Both sides claim the other guys wrecked the talks with last minute demands and for some reason people actually believe the Americans. The Trump administration’s relationship with the truth is fleeting at best, so why do people think they are being honest? Team Canada is fighting the Fed short-handed. Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe claim to fully support the Carney government, as long as they do not have participate.
US Trade Rep Greer suggested that America should consider banning some Canadian goods.
WTI oil caught a small bid and rose in a $80.67-$82.22 range. Oman stopped cooperating with the US in order to facilitate tanker movement, and probably after Trump threatened to bomb them. Trump isn’t helping things. The US Justice Department is considering reviving a civil war era war court to claim Iran oil as a war prize.
US weekly jobless claims fell 4,000 to 203,000 last week. The US Goods Trade deficit widened to $118.88 from $102.1, led by an increase in imports which suggests Trump’s tariffs are not much of a deterrent.
USDCAD Technicals
The intraday USDCAD technicals remain bullish above 1.3840 and looking for a break above 1.3910 to target 1.3940. A move below 1.3840 shifts the focus to 1.3810.
Longer term, USDCAD is bearish below 1.3970, a level guarded by resistance in the 1.3900-20 zone, and the 100-day moving average at 1.3916.
For today, USDCAD support is at 1.3840 and 1.3820. Resistance is at 1.3910 and 1.3940.
Today’s expected range is 1.3840-1.3920.
FX Heat Map
FX open high low 6:00 am
Teeing off at Jackson Hole
The greenback was choppy, but rangebound overnight. Trading volumes are thin due to summer holidays and yesterday’s US data (PCE-price index, GDP, Durable Goods Orders) did nothing to change the outlook for US interest rates. Fed chair Warsh’s keynote speech from Jackson Hole is tomorrow.
Taking Stock
Asian markets closed mixed. Japan’s Topix squeezed out a 0.15% gain, while Australia’s ASX 200 lost 0.98% and the Hong Kong Hang Seng fell 0.34%.
As of 5:40 am PT, European bourses are mixed. The German DAX is up 0.32%, while the French CAC-40 has lost 1.14% and the UK FTSE 100 is down 0.42%. S&P 500 futures are up 0.39%, the US 10-year yield is 4.662%, the DXY is 99.21and gold is $4,589.24.
EURUSD | Range 1.1637-1.1660
EURUSD traded defensively in a tight range with firmer energy prices weighing on the single currency. Yesterday’s sticky (but ultimately, non-threatening) US inflation data and the upcoming central banker speeches from Jackson Hole sidelined traders. Gfk consumer Climate improved in Germany. The climate rose 2.8 points to -26.6 but the news had little impact on trading.
GBPUSD | Range 1.3571-1.3599
Sterling is consolidating yesterday’s losses in quiet trading. The UK data calendar has been rather empty, leaving general US dollar sentiment to drive GBPUSD direction. That won’t change today.
USDJPY | Range 159.12-159.52
USDJPY traded higher due to firmer crude prices and higher US Treasury yields. Traders are looking ahead to Friday’s Tokyo inflation numbers but the consensus is that anything close to expectations leaves a BoJ rate hike on the table September 18.
AUDUSD | Range 0.7166-0.7192
AUDUSD continues to trade with a bid after this week’s hotter than expected inflation data raised the odds that the RBA will raise rates at least once more before the end of the year.
USDMXN | Range 16.9402-16.9966
USDMXN rallied due elevated risk aversion pressures stemming from the US Iran war and from escalating verbal hostilities in Canada/US trade talks. After all, Mexico and the US are actively negotiating as well. The US is successfully using a divide-and conquer approach to the trade talks and it is working.
CHINA
- PBoC Fix: 6.7840 vs exp. 6.7261 (prev. 6.7829)
- Shanghai Shenzhen CSI 300 rose 0.86%% to 4,630.28
China’s industrial profits rose 17.6% in January-July, led by an 18.5-fold surge in electronics and semiconductor profits, highlighting the AI-driven industrial boom. A National Peoples Congress report confirmed that GDP grew 4.7% in the first half, while acknowledging headwinds from geopolitical tensions, weak domestic demand, and business pressures.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
