USDCAD open (6:00 am): 1.4236 overnight range 1.4209-1.4240, close 1.4222
USDCAD is grinding higher again even though US Treasury yields have caught their breath. The 10-year yield has backed off the multi-year highs it reached yesterday and sits at 5.17%, which allowed the CAD/US 10-year yield spread to narrow a tad.
WTI traded in an $88.85-$93.30 range on hopes that Middle East crude exports continue to recover despite Trump’s plans to send more ships and troops to the region.
Canada is the new China, according to Trump, who is touting his great relationship with Xi Jinping. He said that China no longer rips America off, but Canada does.
USDCAD Technical Outlook
The intraday USDCAD bias is bullish while trading above 1.4200 and looking to test the June peak at 1.4265. The uptrend channel from September 9 is intact and bound by 1.4200 on the bottom and 1.4300 on the top. However, the 4-hour MACD has crossed below its signal line and RSI has slipped back to 60 from overbought, suggesting momentum is cooling and a period of consolidation is likely before the next leg higher.
Longer term, USDCAD has rallied roughly 500 pips from the September 9 low of 1.3760, cleared the 0.618 Fibonacci retracement of the February 2025 to January 2026 decline at 1.4172, and is now challenging the June peak at 1.4265. The daily RSI is deeply overbought. A decisive break above 1.4265 would put the daily upper Bollinger Band at 1.4347 in play, followed by the 0.786 Fibonacci level at 1.4358. A failure at 1.4265 risks a double top and a pullback to 1.4110.
For today, support is 1.4210 and 1.4170. Resistance is 1.4260 and 1.4290.
Todays range 1.4210-1.4290
FX Heat Map
FX open high low 6:00 am
Rate Hike Deferred
Today’s US employment data supported the view of some of the Fed doves. US nonfarm payrolls rose just 29,000, compared to expectations for a 90,000 gain and its rather soft compared to the, August 162,000 print. The unemployment rate ticked up to 4.2% from 4.1%. The result was just another nail in the coffin for an October rate hike
Governor Michelle Bowman may be thinking “I told you so” when she saw todays NFP as yesterday she said she didn’t sees an urgent need for more rate moves this year. Vice Chair Philip Jefferson said the Fed may need more time before deciding on its next move.
The US dollar index and Treasury yields dropped on the NFP news while S&P 500 futures and gold prices rose.
Time to Bomb Iran
The Wall Street Journal reports that the Pentagon is sending a third aircraft carrier strike group and additional Marine Corps ships to the Middle East, adding up to 10,000 troops by the end of November.
Taking Stock
Asian equities closed with Hong Kong’s Hang Seng dropping 2.60%, Japan’s Topix losing 0.99%, while Australia’s ASX rose 0.79%.
As of 5:40 am PT , European bourses are all higher. The German DAX has gained 0.97%, the French CAC-40 is up 0.46% and the UK FTSE 100 is up 0.21%. S&P 500 futures have gained 0.79%, the US 10-year Treasury yield is 5.176%, the DXY is 101.81 and gold is $4,209.00
EURUSD | Range 1.1221-1.1269
The euro is trading near its session low ahead of this morning’s US nonfarm payrolls data. The Eurozone flash HICP hit a three-year high with inflation rising 3.8% y/y in September, up from 3.2% in August. It didn’t help EURUSD because traders are doubting the ECB will hike this month.
GBPUSD | Range 1.3182-1.3243
Sterling is trading in the middle of its overnight range and near four-month lows. Broad US dollar strength, fuelled by the global bond sell-off and elevated Treasury yields, is weighing heavily on sterling, while concerns about the UK’s October Autumn Budget are adding to the pressure.
USDJPY | Range 156.96-158.22
USDJPY peaked in Asia and slid steadily into the NY open ahead of today’s NFP numbers. Japanese inflation was hotter than expected. Tokyo CPI rose 2.7% y/y (forecast 2.5%), core CPI rose 2.7% (forecast 2.4%), while the unemployment rate ticked up to 2.5% from 2.4%. Economy Minister Minoru Kiuchi said, “Japan has emerged from an era where it needed the kind of reflationist policies taken under Abenomics.”
AUDUSD | Range 0.6913-0.6972
The Aussie eked out a small gain and is near the top of its overnight range, but the rally is merely a correction inside the downtrend channel between 0.6890 and 0.6980. AUDUSD continues to suffer from less-hawkish-than-expected comments by RBA Governor Michele Bullock this week.
USDMXN | Range 18.2047-18.3416
USDMXN continues to be underpinned as a narrowing 2.50% interest-rate differential triggers an aggressive unwinding of the peso carry trade. In addition, investor sentiment is weighed down by delayed USMCA tariff talks and escalating Middle East geopolitical risks, ahead of today’s US employment data.
CHINA
Chinese markets are closed for Golden Week Oct. 1-Oct. 7.
- PBoC Fix: Market closed
- USDCNH: 6.7054 (-0.0078)
- Shanghai Shenzhen CSI 300 Closed (last 4,357.62 on September 30)
Chart: Offshore yuan USDCNH
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
