October 20, 2026

USDCAD open (6:00 am): 1.4058, overnight range 1.4053-1.4112 close 1.4112

Canada still has 10 provinces. Seventy-six percent of Albertan’s decidedly rejected ceding from Canada but effectively sent a reminder to Ottawa that Quebec is not the only province that can play the “separation game.”

USDCAD is weighed down by a mix of lower US Treasury yields, and expectations for the Bank of Canada to raise rates on October 28.

Governor Tiff Macklem fueled the hawkish view over the weekend when he said “The question we’re going to be asking ourselves is inflation likely to come back down towards our target on its own, or are we going to have to raise interest rates to influence the path.”

Yesterday, headline CPI ticked up to 3.1% y/y (forecast 3.2%, August 3.0%), prompting Scotiabank to forecast a 25 bp hike this month. Many other major bank economists disagree.

WTI rose from 98.07 to 100.92 overnight and sits at 100.60 in early NY trading. The gains, after Iran’s IRGC said it shot down a US MQ-9  Predator drone over the Strait of Hormuz and reports surfaced of explosions in Bandar Abbas. The Houthis also claimed strikes on Saudi Aramco facilities at Yanbu and the Shaybah field.

Tehran is warning it could stretch its blockade to Bab al-Mandeb and Suez, while Washington insists Gulf exports are back near 80% of pre-war levels. Meanwhile, Kpler Plc data shows Middle East crude flows averaging roughly 8.5M barrels a day over the past week, down from more than 20M the week before, after at least ten confirmed vessel incidents.

Today’s data calendar includes US building permits and pending home sales.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while trading below 1.4095, and prices are flirting with the 100-day moving average at 1.4042. The momentum indicators suggest USDCAD is deeply oversold, so a corrective bounce cannot be ruled out, but rallies toward the 4-hour mid-Bollinger Band at 1.4093 are likely to attract sellers.  A break below 1.4040 targets 1.4000.

Longer term, a daily close below 1.4042 would be the first since mid-September while a move through 1.4000 puts the 61.8% Fibonacci level at 1.3955 in play. However, the daily RSI shows USDCAD as extremely oversold.

For today, support is 1.4020 and 1.3985. Resistance is 1.4085 and 1.4140. Today’s Range 1.3990-1.4080

FX Heat Map

FX open high low 6:00 am

The Fed Rate Hike Fears Fade

About a month ago, markets were so convinced of an October rate hike that the odds were around 70%. Today, they are a mere 17%, although a December move is still treated as close to a deal done. The 10-year Treasury yield is parked at 5.131%, which is still near multi-year highs, and that remains an attractive level for conservative investors.

The US dollar is trading defensively despite the escalation of hostilities between Iran and the US and Trump’s oil deal with Putin.

Taking Stock

Asian equity indexes closed in the red. Japan’s Topix fell 1.43%, Hong Kong’s Hang Seng gave up 1.32% and Australia’s ASX 200 dropped 0.32%.

As of 5:15 am, European bourses are posting losses with the German Dax down 0.71%, the French Cac-40 down 0.80% while the UK FTSE100 has shed 0.51%. S&P 500 futures are down 0.25%, the DXY is 101.86 gold is $4,115.57and the US 10-year Treasury yield is 5.11%.

EURUSD | Range 1.1205-1.1235

The euro is treading water at 1.1214, propped up by the softer dollar but weighed down by the political mess in Paris. The French Parliament holds its first formal vote on the revenue side of the 2027 budget today. Markets are not yet treating it as a eurozone-wide crisis, but the CAC is hardly enjoying itself. The France-Germany 10-year spread has blown out to about 147 bp. German PPI rose 1.9% m/m in September (forecast 0.8%).

GBPUSD | Range 1.3299-1.3359

Sterling rallied on the news that the UK unemployment rate fell to 4.7% from 4.9% while employment rose 102,000 compared to 67,000 previously. The gains have already faded as the results did not do anything to change the expectations for the BoE to hike rates in November.

USDJPY | Range 158.04-158.60

USDJPY is just above its session low after Japan’s 20-year JGB auction drew record demand with a bid-to-cover of 5.84x (prior 4.01x) and an average yield of 3.723%. There are reports that the BoJ will raise its inflation forecast for the next fiscal year due to oil price pressures. USDJPY was also weighed down by diminished Fed rate hike fears.

AUDUSD | Range 0.6970-0.6999

AUDUSD drifted higher as it rode the wave of bearish US dollar sentiment. The Aussie has a bit of support as hawkish commentary from RBA officials countered recent negative employment data.

USDMXN | Range 18.3748-18.4854

USDMXN is bid on the back of narrowing Mexican/US interest rate spreads, concerns that Banxico has adopted a dovish rate bias and the stalled US and Mexico trade talks.

CHINA

PBoC Fix: 6.7200 vs exp. 6.6813 (prev. 6.7208)

Shanghai Shenzhen CSI 300 fell 0.54% to 4,152.11

PBoC left 1-year and 5-year Loan Prime Rates unchanged at 3.0% and 3.5% respectively.

Sources: Investing.com, Newsquawk, Associated Press, FXStreet, investingLive, Tradingpedia, Business Recorder, TradingView