May 5, 2025
USDCAD: open 1.3788, overnight range 1.3787-1.3829 close 1.3820
Canadian’s can breath a sigh of relief. Trump declared that it was “highly unlikely” that the US would use military force to take over Canada.”
Then again, maybe he will. The deranged-sounding President who was interviewed on NBC’s Meet the Press yesterday, (read the interview transcript here) thinks Mark Carney is “very nice” but also said is “All I have to do is free it up from the environmental lunatics.”
Mr Carney is a charter member and a world leader of those “environmental lunatics.”
Carney wrote a book —Value (S) building a Better World for All, created the narrative about how climate change created risks for financial markets, co-founded the Glasgow Financial Alliance for Net Zero (GFANZ) and became the UN Special Envoy on Climate Action and Finance. As Sesame Street sang “One of those things is not like the other.”
It will be an interesting meeting when Carney meets Trump in Washington tomorrow.
USDCAD shrugged off lasts week’s soft GDP (blamed on weather) and falling oil prices and drifted lower in holiday thinned trading.
WTI prices gapped lower to start the week, falling from 58.63 to 55.39 following news that Opec and friends decided to increase production by 411,000 barrels/day beginning June 1. That brings the three-month cumulative total to nearly 1.0 million barrels/day.
Analysts suggest the increase was meant to punish those members (Iran for one) who consistently produced more than the green quota. Trump may have played a role. He campaigned on lower energy costs and Saudi Arabia wanted new modern US weapons. Coincidently, the US just approved a $3.5 billion missile sale to the Saudis’.
There are no Canadian economic reports today.
USDCAD Technicals
USDCAD is directionless inside the well-defined 1.3770-1.3910 range and little changed from Friday. There is a modest downtrend which remains intact while prices are below 1.3840 which keeps the focus on support at 1.3770. A topside break will extend gains to 1.3870, then 1.3910
The medium term technicals are negative below 1.3950 but there is plenty of support between 1.3720 and 1.3750.
For today, USDCAD support is at 1.3790 and 1.3740. Resistance is at 1.3860 and 1.3910
Today’s Range: 1.3780-1.3850
Chart: USDCAD 4 hour
FX at a Glance
Trade Deal Hopes Improve Risk Sentiment
Trump offered hopes that some trade deals will be announced this week. Maybe yes, maybe no. Hyperbole is Trump’s middle name and as the Washington Post pointed out, his claim about negotiating with 200 countries is sketchy as there are only 193 countries in the world.
Trump slapped on a 100% tariff on foreign movies coming into the country although how those tariffs will be collected is another story. And in a Joe Biden moment, he tweeted on TruthSocial that he ordered Alcatraz prison to be reopened—twice.
Slow Day highlighted by US ISM Services Data
UK markets were closed, sharply reduced trading volumes overnight. The April US ISM Services data is due and traders will be looking to see the impact of tariffs on the data. More importantly, the FOMC monetary policy announcement is on Thursday. No change is expected.
Equity market activity was muted. In Asia, Australia’s ASX was closed while Japan’s Topix rose 0.31%. In Europe, the German DAX gained 0.46% while the French CAC 40 lost 0.66%. S&P 500 futures are down 0.81%. Gold rose to 3313.75 from 3237.93. The US 10-year Treasury yield is steady at 4.318%.
Some guys just know how to pick stocks. A Bloomberg headline reads “CEOs Celebrate Buffett as He Calls a Close on 5,500,000% Run”
EURUSD
NY Open: 1.1343, Overnight Range: 1.1296-1.1348
EURUSD inched higher steadily in thin trading with prices supported by hopes for reduced trade tensions. The topside may be limited after Friday’s US NFP data reduced the odds that the Fed would cut rates in June. The technicals suggest that EURUSD is vulnerable to steep losses on a break below 1.1210.
GBPUSD
NY Open: 1.3310, Overnight Range: 1.3260-1.3307
GBPUSD inched higher due to improved trade optimism, but the gains were just noise. The Bank of England’s anticipated 25 bp rate cut is fully priced in while the FOMC meeting is also looming.
USDJPY
NY Open: 144.57, Overnight Range: 143.82-144.99
USDJPY opened at the peak and drifted lower into the NY open. Many Japanese traders took the day off to celebrate Children’s Day. Concerns about the risk of Japan weaponizing its $1 trillion dollar Treasury stash weighed on the currency pair even as Finance Minister Katsunobu Kato tries to walk back his earlier comment.
AUDUSD
NY Open: 0.6494, Overnight Range: 0.6434-0.6494
AUDUSD extended Friday’s gains with prices underpinned by news that Labour’s Anthony Albanese secured a landslide victory in the weekend election, partly because of Trump. The RBA is expected to cut rates by 25 bps at its next meeting but today’s TD Inflation gauge, which rose to 3.3% y/y from 2.8% in March, alters that view.
NZDUSD
NY Open: 0.5986, Overnight Range: 0.5942-0.5994
NZDUSD gained on improved risk sentiment, but the rally stalled just below 0.6000 resistance.
USDMXN
NY Open: 19.5555, Overnight Range: 19.5500-19.6290
USDMXN sold off on improved trade sentiment but the downside is limited due to dovish expectations for Banxico and expectations for unchanged rates at Thursday’s FOMC meeting. Mexican markets are closed today.
China Snapshot`
Markets Closed
PBoC fix: 7.2014 vs exp. 7.2670 (Prev. 7.2029).
Shanghai Shenzhen 300 fell 0.12% to 3770.57
FX high, low, open (as of 6:00 am ET)
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
