May 9, 2025
USDCAD: open 1.3917, overnight range 1.3910-1.3943, close 1.3924
USDCAD is clawing back its overnight losses as the impact from the more-hawkish-than-expected FOMC meeting outcome fades. Fed Chair Powell is content to await further data before cutting rates, while BoC Governor Tiff Macklem doesn’t have that luxury. Canada is not a “priority” for US trade talks according to comments from Commerce Secretary Howard Lutnick.
Yesterday, Bank of Canada Governor Tiff Macklem reiterated that a prolonged trade war would increase risks to Canadian financial stability, saying “A long-lasting trade war poses the greatest threat to the Canadian economy. It also increases risks to financial stability.”
Oil traders are betting on a China/US trade war thaw, and WTI has recouped all, and then some, of this week’s losses. Price rose from a low of 55.39 on Monday to 61.19 in early NY trading. Short-covering contributed to the rally.
Canada added 7,400 April, which is a crummy number but still beat the estimate of a 2,500-gain. The improved results were due to election hiring. The public sector added 22,900 jobs while the private sector lost 26,800. Self employed workers added 11,200. Even worse, the unemployment rate jumped to 6.9% from 6.7%.
A flock of Fed speakers will roost on podiums across the US, including Governor Adriana Kugler, New York Fed President John Williams, Chicago Fed President Austan Goolsbee, and Governor Christopher Waller.
Option expires bracket USDCAD today, with $721 million of strikes in the 1.3890–1.3900 area rolling off and $1.00 billion of 1.3990–1.4000 maturing.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.3860 supported by the break above the 1.3890-1.3910 area. However, the bullish trend needs to break above the 1.4010 area, other wise the gains are merely a correction
The medium-term view is bearish while prices are below the 200-day moving average at 1.4010. A move below 1.3840 negates the upside pressure and shifts the target 1.3740.
For today, USDCAD support is at 1.3890 and 1.3860. Resistance is at 1.3950 and 1.4010.
Today’s Range: 1.3890-1.3990
Chart: USDCAD daily
FX at a Glance
The Hand of Trump?
White smoke rose from the Sistine Chapel, and from deep in the field, Cardinal Robert Prevost emerged as Pope Leo XIV. Many were stunned—he’s an American from Chicago. Trump hasn’t taken credit for the victory—yet, but the vote followed VP Vance’s meeting with Pope Francis, who promptly died. Was the Vatican a “major source” of fentanyl? How serious were those tariff threats? The timing speaks volumes.
Trump Hoses UK
President Trump’s latest trade announcement—hailed as “historic” by Downing Street and “maxed out” by Trump himself—is less deal, more damage control. The much-hyped agreement restores market access for UK cars and steel that Trump himself torched with January’s tariff tantrum. The so-called agreement slashes US tariffs on British cars from 25% to 10%—but conveniently ignores that pre-Trump, the rate was just 2.5%. In other words, Britain’s “win” is a quadrupling of what it used to be charged. And Trump and the media are hyping it like it’s the greatest thing since sliced bread.
It isn’t. It isn’t even a deal—it’s a framework that only covers a few components of US/UK bilateral trade. What about financial services, or technology, chemicals, professional services etc? Shouldn’t they be included in “fair trade negotiations?” Perhaps being a member of EU wasn’t so bad.
Global Equity Indexes Climb
Wall Street bought the White House UK/US trade story hook, line, and sinker despite it being jargon jambalaya and the major indexes closed with gains. Asia traders were even more gullible. Australia’s ASX closed with a 0.46% gain while Japan’s Topix finished up 1.29%. European traders are hoping that the US/UK “deal” will lead to a similar result with the China/US meetings in Switzerland this weekend. To that end, European stock indexes are higher led by a 0.66% rise in the French CAC 40 . S&P 500 futures Have risen 0.19% and the 10-year Treasury yield rose touched 4.398% after being as low as 4.28% yesterday.
EURUSD
NY Open: 1.1246, Overnight Range: 1.1197-1.1260
EURUSD has been on the defensive for a few days thanks to Fed Chair Powell’s comments about “waiting” to adjust monetary policy and misguided optimism around tariffs. A couple of ECB policymakers warned that more rate cuts are likely. Yesterday’s break below the 1.1250 suggests that any trade setbacks may drive EURUSD below support at 1.1200 and test 1.1100.
GBPUSD
NY Open: 1.3268, Overnight Range: 1.3212-1.3279
GBPUSD traders are dealing with the news of the UK/US trade tweaks and the Bank of England’s somewhat hawkish outcome. The BoE carried the day. The split vote, which included Chief Economist Huw Pill, underpinned expectations for just two more cuts in 2025. The trade news was largely expected and not much of anything.
USDJPY
NY Open: 145.33, Overnight Range: 145.08-146.19
USDJPY drifted down from its overnight peak mainly due to profit-taking ahead of the weekend after its post-FOMC rally and hopes for a thaw in China/US trade relations. Japanese data has been mixed but keeps the focus on further BoJ rate hikes.
AUDUSD
NY Open: 0.6399, Overnight Range: 0.6371-0.6415
AUDUSD is attempting to recoup its losses following the more hawkish-than-expected FOMC meeting. The US/UK trade news has supported prices on hopes that the US and China will downgrade trade tensions at their talks this weekend.
NZDUSD
NY Open: 0.5890, Overnight Range: 0.5871-0.5908
NZDUSD is in the same boat as AUDUSD and hoping for an improved China/US trade environment.
USDMXN
NY Open: 19.5061, Overnight Range: 19.5054-19.5476
USDMXN retreated on the heels of a higher-than-expected inflation reading yesterday and then added to the gains after the US/UK trade announcement. A move below 19.4500 will lead to a test of support at 19.4000.
China Snapshot`
PBoC fix: 7.2095 vs exp. 7.2581 (Prev. 7.2073
Shanghai Shenzhen 300 fell 0.17% to 384616
China’s trade surplus widened to $96.18 bio in April, Exports rose 8.1%, and imports fell 0.2%. Exports to the US dropped 21%
Julian Evans-Pritchard of Capital Economics writes that about 6 million jobs could be lost because of US tariffs and boost China’s urban jobless rate about 6.0% from 5.2% in March.
FX high, low, open (as of 6:00 am ET)
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
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