USDCAD open: 1.4162, overnight range 1.4142-1.4174, close 1.4142
USDCAD trickled higher on the back of negative risk sentiment and widening CAD/US interest rate spreads and continued to do so in early trading.
The CAD/US 10-year yield spread widened to -129.6 today, from -124 on Friday before narrowing to 125.1.
USDCAD is also underpinned by a fresh escalation in Ottawa-Washington trade tensions, with a slew of US tariffs on Canadian goods taking effect tomorrow. The measures include new restrictions on Canadian autos, dairy and alcohol, imposed in response to Canada’s C$27.6 billion in counter-tariffs introduced on September 8. The question is-Will Canada respond again?
WTI oil traded in a $92.70-96.53 range, but prices have drifted down to $94.86 in early NY. Trump and Iran have reached an impasse. The situation is worsened due to the Houthi attacks on Saudia Arabia and disruption of shipping in the Red Sea. A Ukrainian drone knocked out a Russian refinery which put a further damper on crude supplies.
There are no top-tier Canadian or US economic reports today,
USDCAD Technical Outlook
The intraday USDCAD are bullish while trading above 1.4150 and looking for a decisive break above 1.4180 to extend gains to 1.4250. The rally appears to be overdone and a move below minor support in the 1.4140 area will target 1.4110.
Longer term, a break above 1.4180 would strengthen the bullish technical picture and put 1.4250, the 100% Fibonacci retracement and December high in play. Beyond there, 1.4400 becomes the next longer-term objective. However, a move below 1.4110 suggests further losses to 1.4020.
For today, support is 1.4130 and 1.4110. Resistance is 1.4180 and 1.4210.
Todays range 1.4110-1.4210.
FX Heat Map
FX open high low 6:00 am
Trump Rejects Iran’s Offer
Iranian Foreign Minister Araghchi says he came to New York to make peace and proposed a seven-day ceasefire tied to reopening Hormuz. Trump said “Nyet,” saying the terms might have worked a year ago. But Trump still plans on having talks this week.
The news drove oil prices higher which in turn increased inflation risks. Bond traders were not impressed and they sold bonds, boosting Treasury yields in the process. FX traders bought US dollars and the DXY gained 0.11%.
Trump Xi Summit Scores a Result.
It was a score draw rather than a knockout, leaving Trump with concrete trade concessions and Xi with a vital win: lower trade barriers, extra time, and a summit cementing China’s status as an equal superpower.
The US and China confirmed a USD 30 billion for USD 30 billion reciprocal tariff reduction, a new bilateral AI dialogue channel, and a Chinese commitment to import US coal in 2027 and 2028. Beijing also signalled it could allow domestic firms like ByteDance and Alibaba to buy Nvidia chips built for high end computers.
Taking Stock
Asian equities closed on a mixed note. The Hang Seng rose by 0.54% while the ASX 200 gained 0.17%. Japan’s Topix dropped by 0.40%.
As of 5:40 am PT, the French CAC-40 is up 0.56%, the UK FTSE 100 is up 0.46% and the German Dax has gained 0.21%. S&P 500 futures are down 0.34%, the 10 year Treasury yield is 5.217% the DXY is 101.14 and gold is $4,146.85.
EURUSD | Range 1.1366-1.1391
EURUSD bounced around in a narrow band with gains capped by rising oil prices, diminished risk sentiment and recent US data supporting at least three more Fed rate hikes by March.
GBPUSD | Range 1.3224-1.3274
Sterling drifted higher in Asia then jumped to its peak in early European trading after Bank of England Deputy governor Dave Ramsden warned that interest rates would need to rise if inflation pressures continued to build. The comments were no anything new and prices have slipped to the middle of the overnight band in early NY.
USDJPY | Range 156.52-157.86
USDJPY climbed from Friday’s close of 157.28 to the session peak on the back of rising US Treasury yields and higher oil prices. Then a bit of verbal intervention from Japan’s Vice Finance Minister Atsushi Mimura and the spokesperson for the currency, spoke. He warned “Japan’s prime minister, finance minister and the US have sent a very clear message. Markets should take that message at face value.” That was enough to send USDJPY bulls stampeding for the exit.
AUDUSD | Range 0.7007-0.7030
The Aussie is playing defense again as it heads into tomorrow’s widely expected RBA rate hike, with positioning ahead of the decision doing more to move the pair than anything in today’s session itself. Higher oil prices have soured global risk sentiment and that is weighing on AUDUSD.
USDMXN | Range 17.6739-17.8153
The peso drifted lower in tandem with US Treasury yields drifting higher. Furthermore, the lack of progress in the Iran and US war which led to higher oil prices soured risk sentiment, which further underpinned USDMXN. The US and Mexico trade talks which were delayed until October added another layer of uncertainty.
Iranian Foreign Minister Araghchi says he came to New York to make peace and proposed a seven-day ceasefire tied to reopening Hormuz. Trump said “Nyet,” saying the terms might have worked a year ago. But Trump still plans on having talks this week.
The news drove oil prices higher, which in turn increased inflation risks. Bond traders were not impressed, and they sold bonds, boosting Treasury yields in the process. FX traders bought US dollars and the DXY gained 0.11%.
Trump-Xi Summit Scores a Result
It was a score draw rather than a knockout, leaving Trump with concrete trade concessions and Xi with a vital win: lower trade barriers, extra time, and a summit cementing China’s status as an equal superpower.
The US and China confirmed a USD 30 billion for USD 30 billion reciprocal tariff reduction, a new bilateral AI dialogue channel, and a Chinese commitment to import US coal in 2027 and 2028. Beijing also signalled it could allow domestic firms like ByteDance and Alibaba to buy Nvidia chips built for high-end computers.
Taking Stock
Asian equities closed on a mixed note. The Hang Seng rose by 0.54% while the ASX 200 gained 0.17%. Japan’s Topix dropped by 0.40%.
As of 7:30 am, the French CAC-40 is up 0.30%, the UK FTSE 100 is up 0.22% and the German Dax is flat. S&P 500 futures are down 0.46%, the 10-year Treasury yield is 5.225%, the DXY is 101.10 and gold is $4,150.29.
EURUSD | Range 1.1371-1.1391
EURUSD bounced around in a narrow band with gains capped by rising oil prices, diminished risk sentiment and recent US data supporting at least three more Fed rate hikes by March.
GBPUSD | Range 1.3224-1.3274
Sterling drifted higher in Asia then jumped to its peak in early European trading after Bank of England Deputy Governor Dave Ramsden warned that interest rates would need to rise if inflation pressures continued to build. The comments were not anything new and prices have slipped to the middle of the overnight band in early NY.
USDJPY | Range 156.52-157.86
USDJPY climbed from Friday’s close of 157.28 to the session peak on the back of rising US Treasury yields and higher oil prices. Then came a bit of verbal intervention from Japan’s Vice Finance Minister Atsushi Mimura, the spokesperson for the currency. He warned, “Japan’s prime minister, finance minister and the US have sent a very clear message. Markets should take that message at face value.” That was enough to send USDJPY bulls stampeding for the exit.
AUDUSD | Range 0.7007-0.7030
The Aussie is playing defense again as it heads into tomorrow’s widely expected RBA rate hike, with positioning ahead of the decision doing more to move the pair than anything in today’s session itself. Higher oil prices have soured global risk sentiment, and that is weighing on AUDUSD.
USDMXN | Range 17.6739-17.8153
The peso drifted lower in tandem with US Treasury yields drifting higher. Furthermore, the lack of progress in the Iran and US war, which led to higher oil prices, soured risk sentiment, which further underpinned USDMXN. The US and M
CHINA
- PBoC Fix: 6.7399 vs Exp. 6.7085 (prev. 6.7489)
- Shanghai Shenzhen CSI 300 fell 2.22% to 4,340.76.
US and China agreed to cut reciprocal tariffs by US$30 billion and launch a bilateral AI dialogue. China will buy US coal in 2027 and 2028 and establish a joint agricultural working group. Beijing also signalled it could allow ByteDance and Alibaba to buy Nvidia’s high-end computer chips.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
