May 23, 2025
USDCAD: open 1.3805, overnight range 1.3804-1.3866, close 1.3858
USDCAD is probing support in the 1.3770-1.3800 zone as a host of external factors weigh on the currency pair. The domestic outlook, as articulated by Bank of Canada Governor Tiff Macklem suggests that the losses may be unsustainable.
Mr Macklem address the media in a post-G-7 interview and warned that Canadian growth in the second quarter would be very weak while uncertainty around tariffs would make Q3 growth even weaker.
Canada March Retail Sales are expected to rise 0.7% m/m, while the ex-autos component will be flat. The data will be distorted due to front-loading ahead of Trumps tariffs.
WTI oil prices consolidated this week’s losses in a 60.57-61.33 range. Prices are supported by US dollar weakness but fears of another Opec production increase and concerns about an ongoing oil glut exacerbated by Trumps trade wars is limiting gains.
Trading action is expected to deteriorate after lunch ahead of the US long weekend.
USDCAD Technicals
The intraday USDCAD technicals are bearish while trading below 1.3880 and are looking to break below support in the 1.3770-1.3805 area to extend losses to the 1.3740-50 zone. A move above 1.3880 would negate the immediate selling pressure and target 1.3920.
The medium term technicals are bearish while prices are below 1.3880 and while they are below the 200 day moving average at 1.4019. However, in the short-term USDCAD is oversold which will act as a drag on further losses.
For today, USDCAD support is at 1.3805 and 1.3770. Resistance is at 1.3860 and 1.3890
Today’s Range: 1.3770-1.3870
Chart: USDCAD daily
FX at a Glance
Trump Rant Trashes EU and Apple
Trump turned benign FX and equity markets into turmoil with a 7:43 am ET rant posted on his TruthSocial account— The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with. Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable. Our discussions with them are going nowhere! Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!
He also took direct aim at Tim Cook and Apple with this threat “I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S. Thank your for your attention to this matter!
Apple Stock got crushed and lost the equivalent of CAD $155.34 billion on the news.
“Throw another Shrimp on the Barbie”
The world is rife with turmoil and global markets remain in a heightened state of flux. But, since that won’t change today, or even in the next week, traders in London and New York plan to shut down early and get an early start to the first long weekend of the summer—Memorial Day in America and the Spring Bank Holiday in the UK. Over 53% of the daily FX liquidity will have evaporated on Monday.
Budgets, Trade and G-7 Finance Ministers
Trump campaigned on cutting interest rates (among other things) but the massive spending increase in his “big, beautiful bill” has driven the US 10-year yield to 4.55%, which it was before he was sworn in. That bill is now facing Senate approval.
Trump’s tariffs are making everything more expensive and disrupting global trade. Reuters is reporting that US trade negotiators are demanding the EU make unilateral tariff reductions or face another 20% increase in tariffs.
The G-7 Finance Ministers meeting in Banff ended with a communique declaring its unity and commitment to global cooperation. It was really a non-event. The delegates failed to call out the US and Trump’s global economy-wrecking tariff strategy and instead danced around U.S. trade policy like diplomats at a minefield—everyone knew the elephant wore a MAGA hat, but no one dared name it.
Equity Markets Adrift
Wall Street closed mixed to flat but Asian equity indexes squeezed out small gains. Japan’s Topix rose 0.68% while Australia’s ASX 200 gained 0.15%.
European bourses were treading water until Trump tweeted. Then all hell broke lose. The French CAC-40 is down 1.64% while the German Dax is up 1.115%. S&P 500 futures went from flat to down 1.53% as of 5:15 PT. and the US 10-year Treasury yield is steady at 4.524%. Gold (XAUUSD) gained $35 and is 3329.00.
EURUSD
NY Open: 1.1351, Overnight Range: 1.1279-1.1357
EURUSD is trading at the top of its overnight range as US budget drama and rising Treasury yields encourage an exodus from the greenback and as the second most liquid currency, the Euro is benefiting. German Q1 GDP surprised to the upside rising 0.4% q/q (forecast 0.2%) which added to EURUSD support. Traders appear to be ignoring the latest US tariff threat to EU exports.
GBPUSD
NY Open: 1.3499, Overnight Range: 1.3414-1.3502
GBPUSD climbed on the back of broad US dollar weakness and then got a boost from better-than-expected Retail Sales data which rose 1.2% m/m in April. Sterling is underpinned by the UK/US trade deal.
USDJPY
NY Open: 143.38, Overnight Range: 143.15-144.18
USDJPY losses were fueled by a hotter-than-expected April inflation report which saw CPI ex Fresh Food jump to 3.5% y/y from 3.2% in March. The result is well above the BoJ inflation target which analysts suggest will ensure a 25 bp rate hike at the next BoJ monetary policy meeting.
AUDUSD
NY Open: 0.6465, Overnight Range: 0.6408-0.6463
AUDUSD rallied thanks to widespread US dollar weakness driven by ongoing American budget concerns and the prospect of increased US deficits. Gains may be limited due to the dovish outlook expressed by RBA Governor Michele Bowman earlier this week.
NZDUSD
NY Open: 0.5957, Overnight Range: 0.5896-0.5958
NZDUSD is at the top of its overnight range supported by Q1 Retail Sales which rose 0.8% q/q, beating the forecast but lower than the previous result. However, the bulk of its gains were because of US dollar selling pressures.
USDMXN
NY Open: 19.2605, Overnight Range: 19.2556-19.3299
USDMXN is being undermined by US dollar woes, and better-than-expected economic data this week. Yesterday, Mexico Q1 GDP at 0.8% y/y was unchanged which was considered a good result and USDMXN is at the bottom of its range for May. However, Bank of America warned clients on Wednesday that the peso is overvalued by about 10%.
China Snapshot`
PBoC fix: 7.1919 vs exp. 7.2151 (Prev. 7.1903).
Shanghai Shenzhen 300 fell 0.81% to 3882.27
Chinese and US trade authorities are continuing to talk. Chinese vice-foreign minister Ma Zhaoxu and his US counterpart Christopher Landau issued statements with the usual blather about “the importance of “bi-lateral” trade and the need to keep talking.
China announced that the 10-nation Association of South East Asian Nations (Asean) completed talks to update the 15-year-old agreement and the deal awaits ratification from member countries.
FX high, low, open (as of 6:00 am ET)
Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.
