May 29, 2025

USDCAD: open 1.3822, overnight range 1.3817-1.3862, close 1.3839

USDCAD had a choppy overnight session and made a new high for the week at 1.3862 but reversed the rally and opened where it opened yesterday.  The US/Canada trade situation isn’t going to change much despite the CIT decision invalidating Trumps tariffs imposed using the International Economic Powers Act, because the steel and aluminum tariffs remain in place.

The somewhat hawkish FOMC minutes should underpin USDCAD because the BoC is on track to cut rates by 25 bps on June 4 while the Fed may wait until September to trim its benchmark rate.

WTI oil traded with a bid in a 61.82-63.07 range, supported by Opec’s decision not to boost production in June contrary to earlier expectations.

Today, Initial jobless claims rose 10,000 to 240,000 (forecast 226,000).  Q1 Core Personal Consumption Expenditures rose 3.4% compared to the forecast of 3.5% q/q. Q1 GDP fell 0.2% (forecast -0.3%.

The news led to some US dollar selling, a drop in the 10-year Treasury yield to 4.47% from 4.50%, and S&P 500 futures ticked lower but are recovering.

USDCAD Technicals

The intraday USDCAD technicals are range bound but with a bearish bias while prices remain below 1.3870 with a move below 1.3810 targeting 1.3770. A topside break would extend gains to 1.3920.

The medium term technicals are bearish while USDCAD is below 1.4020 (200 day moving average) a level which is being guarded by resistance at 1.3920. A break below 1.3720 targets 1.3660.

For today, USDCAD support is at 1.3800 and 1.3770. Resistance is at 1.3870 and 1.3920
Today’s Range: 1.3770-1.3860

Chart: USDCAD 4 hour

FX at a Glance

Trump’s Tariff Agenda Hits Massive Speed Bump

The Court of International Trade (CIT) invalidated Trump’s tariff actions based on the International Emergency Economic Powers Act (IEEPA) because “That use is impermissible not because it is unwise or ineffective, but because law does not allow it.”

The Trump Administration was working on an appeal before the ruling was made because as White House Deputy Press Secretary Kush Desai said, “It is not for unelected judges to decide how to properly address a national emergency.”

Tariffs are Trump’s identity.  The tariffs won’t go away but they will be rebranded. In addition to appealing the court decision, Trump could widen the Fentanyl emergency to include all of the countries listed on “Liberation Day.” He could use Section 301of the Trade Act (unfair Trade Practices and decide every country exporting to the US was using unfair trade practices. Outrageous? Sure, but its Trump so it is a possibility.

FOMC Firmly on Hold

The minutes from the FOMC meeting on May 7 revealed policymakers fearing tariff-fueled price increases stoking inflation and raising unemployment. It really wasn’t news as a host of Fed officials have been making similar comments for the past two weeks.  Nevertheless, the minutes downgraded odds for a June rate cut.

Equities, Greenback, and Treasuries Rally

Better-than expected earnings from Nvidia (NVDA Nasdaq) boosted the stock by 6.24% in pre-market trading, and the Court ruling against Trump tariffs sparked a bout of “risk-on” sentiment. The US dollar index (DXY) surged over 9.0% since yesterday’s 99.50 low but it has retraced nearly 50% of that gain in NY.

Japan’s Topix rose 1.53%, leading the major Asian indexes higher. Hong Kong’s Hang Seng gained 1.35% and Australia’s ASX 200 underperformed with a 0.15% rise. It’s the Ascension Day holiday in many European markets but equity traders were active but off their best levels in the wake of the US data. The French CAC 40 index rose 0.55% while the German Dax gained 0.17%. S&P 500 futures are up 0.69% as of 5:00 am PT. Gold (XAUUSD) is 3314.55.

EURUSD
NY Open: 1.1277, Overnight Range: 1.1210-1.1298
EURUSD dropped in Asia in the initial reaction to the CIT tariff decision but uncertainty around the Trump Administrations reaction to the decision led to EURUSD recouping most of the losses in early NY trading. Prices got another lift after the US data and climbed to 1.1335. The Eurozone economic calendar was missing top tier data leaving the residual fall-out from the FOMC minutes, tariff news, and US data to determine direction

GBPUSD
NY Open: 1.3467, Overnight Range: 1.3415-1.3484
GBPUSD has fully recouped its overnight losses in NY as traders digest the FOMC minutes, Nvidia earnings and the CIT news. The added to the rally, post-US data and sit at 1.3499 in NY.Prices may be getting some support from reports that UK policymakers are eager to conclude a US trade deal as they downplayed the court decision. A break above 1.3490 should lead to 1.3530 today.

USDJPY
NY Open: 145.23, Overnight Range: 144.76-146.28
USDJPY rallied then sank in the wake of the overnight news, and the rise in the US 10-year Treasury yield from 4.51% yesterday to 4.54% today. Prices fell further after today’s US data and hit 144.51. Gains are limited as the Bank of Japan is expected to hike rates soon.

AUDUSD
NY Open: 0.6442, Overnight Range: 0.6407-0.6457
AUDUSD is back where it closed as it tracked broad US dollar movements but remains rangebound. Australian Q1 private capital expenditures fell 0.1% compared to expectations for a 0.5% rise but the news had little impact on trading.

NZDUSD
NY Open: 0.5968, Overnight Range: 0.5926-0.5988
NZDUSD traded in the same range as yesterday and opened at the same level with gains capped by contrasting RBNZ and Fed interest rate outlooks. The ANZ Business outlook survey was rather downbeat with Business Confidence falling 12 points to 37 and expected activity dropping 113 points to 35. ANZ Chief Economist Sharon Zollner said, “the economy is recovering but it is still hard going.”

USDMXN
NY Open: 19.3758, Overnight Range: 19.3559–19.4281
USDMXN jumped on the hawkish FOMC minutes and then consolidated the gains overnight, before falling to 19.3233 after the US data. Mexico’s sluggish economic outlook and dovish Banxico monetary policy combined with the prospect of a Fed on hold for longer is underpinning prices. The minutes of the Banxico meeting are released today.

China Snapshot`

PBoC fix:  7.1907 vs exp. 7.2023 (Prev. 7.1894)

Shanghai Shenzhen 300 rose 0.59% to 3858.70

FX high, low, open (as of 6:00 am ET)

Sources: Yahoo Finance, Oanda, Investing.com, Bloomberg.

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