May 6, 2025
USDCAD: open 1.3829, overnight range 1.3801-1.3845 close 1.3824
Canadian Prime Minister Mark Carney is getting some face time with President Trump today—not that it’ll amount to much. The President, in what can only be described as another “Joe Biden” moment, seemed to forget the point of the meeting entirely. When asked about it—flanked by his usual herd of grinning sycophants—he shrugged, “I don’t know. He’s coming to see me. I’m not sure what he wants to see me about, but I guess he wants to make a deal. Everybody does. They all want to make a deal because we have something that they all want.” Doh!
Trump’s public posturing and Carney’s reported temper suggest the meeting may be far more entertaining than productive.
Carney won’t be the only Canadian politician visiting America. The Governor of Massachusetts, Maura Healey, and the Governors of New York State, Connecticut, Rhode Island, Vermont, and Maine invited the Premiers of New Brunswick, Newfoundland, Nova Scotia, Ontario, P.E.I., and Quebec to Boston to discuss “how to continue our partnership, lower costs for people, and support local businesses.” No date has been set.
WTI oil prices recovered all of their losses after OPEC announced another production boost effective June 1. WTI climbed from a low of 55.39 yesterday to 58.87 in early NY trading. The move was mainly because of profit-taking. The risk of falling global demand exacerbated by Trump’s tariffs will cap gains in the near term.
Canada trade data shows the deficit shrinking to $0.51 billion from -$1.41b while the US trade deficit widened to -$140.5 billion from -123.28 billion.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.3800 and looking to break the 3-week downtrend line in the 1.3860-70 area. If successful, a retest of resistance at 1.3950 is likely. A break below 1.3800 shifts the focus to the 1.3720-1.3740 support zone.
The medium term technicals are unchanged. There is a bearish bias below 1.3950 that targets support between 1.3720 and 1.3750.
For today, USDCAD support is at 1.3790 and 1.3760. Resistance is at 1.3860 and 1.3910
Today’s Range: 1.3790-1.3860
Chart: USDCAD 4 hour
FX at a Glance
Asia Dumping Dollars
The Hong Kong Monetary Authority announced that it is diversifying currency exposure into non-US assets while reducing the duration of its US Treasury holdings. The news follows on the heels of the Friday-Monday 10% rally in the Taiwan dollar which has also boosted the Malaysian ringgit, South Korean won, and the Singapore dollar. Trump has said he wants a weaker US dollar and these Asia countries with their trillions of US dollar holdings may deliver it to him.
Trump and Powell in Focus
Global markets were active but unsettled in overnight trading with price action ultimately directionless due to the chaos emanating from the White House which leaves Fed Chair Powell holding the bag. The Fed must balance cutting rates to avoid a recession or hike rates to stave off a new inflation spiral.
Equities Rally in Asia, Sink in Europe
Many Asian equity traders returned from holidays and bought stocks. Japan’s Topix gained 0.31%, Hong Kong’s Hang Seng rose 0.70% and Australia’s ASX 200 was flat. European bourses opened soft with the German Dax dropping 1.32% due to political turmoil in Germany. The French CAC 40 and S&P 500 futures are down 0.70%. 6:20 am EDT. Risk aversion helped propel gold to 3378.42 from 3323.50 while the US 10-year Treasury yield is unchanged at 4.34%.
EURUSD
NY Open: 1.1312, Overnight Range: 1.1280-1.1349
EURUSD had a choppy session but still within yesterday’s range. Price action was volatile following news that Germany’s Conservative leader Friedrich Merz failed to win enough votes to become Chancellor. The latest vote saw his coalition fall six votes shy of a majority. Analysts suggest that Merz will still become Chancellor, but only after a bit more drama and negotiations. German PMI data didn’t help sentiment. Service Sentiment fell into contraction territory (49.0) and Composite PMI is at a 4-month low. Eurozone PPI was also weaker than expected. Reuters is reporting that the EU has plans for €100 billion in tariffs on US imports if trade talks fail.
GBPUSD
NY Open: 1.3317, Overnight Range: 1.3260-1.3378
GBPUSD fell in Asia then climbed steadily in Europe and extended the gains in NY trading. Prices were supported by the EU trade posturing vs the US as Britain is not an American priority. Traders are not feeling very motivated ahead of the Bank of England meeting on Thursday, even though the outcome is fully priced in. S&P Global PMI remained in contraction territory as (according to S&P Economics Director) “heightened business uncertainty weighed on order books during April. Export conditions were particularly weak, with new business from abroad falling to the greatest extent since February 2021.”
USDJPY
NY Open: 143.31, Overnight Range: 142.79-144.28
USDJPY rallied then sank overnight and continued to do so in NY. Prices are roiled by a mix of safe-haven demand following talk of Asian countries diversifying out of US assets. In addition, even though Japanese Finance Minister Katsunobu Kato walked back his veiled threat to weaponize its US Treasury holdings in US/Japan trade talks, the genie is out of the bottle. Divergent Fed and BoJ interest rate policies are another factor. The Fed is expected to cut rates later this year while the BoJ is in tightening mode.
AUDUSD
NY Open: 0.6445, Overnight Range: 0.6438-0.6472
AUDUSD traded sideways in an uneventful session. The currency remains vulnerable to US/China trade war headlines and the risk of RBA rate cuts sooner rather than later are limiting gains.
NZDUSD
NY Open: 0.5977, Overnight Range: 0.5944-0.5991
NZDUSD traded quietly ahead of tomorrow’s quarterly employment data when the unemployment rate is expected to rise to 5.3% from 5.1%.
USDMXN
NY Open: 19.7421, Overnight Range: 19.6835-19.7491
USDMXN extended yesterday’s gains overnight due to Trump tariff concerns especially after Mexican President Gloria Sheinbaum rejected Trump’s offer of US military aid to fight drug trafficking. Traders are awaiting the FOMC on Thursday.
China Snapshot`
PBoC fix: 7.2008 vs exp. 7.2518 (Prev. 7.2014).
Shanghai Shenzhen 300 fell rose 1.01% to 3806.54
Caixin April Services PMI 50.7 vs forecast 51.7, March 51.9, Composite PMI (Apr) 51.1 (Prev. 51.8)
Services PMI fell to its lowest level in seven month which increased the odds that economy was slowing do to Trump tariffs. Analysts are now predicting GDP growth of 4.2% y/y compared to the governments official target of 5%.
FX high, low, open (as of 6:00 am ET)
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
