June 5, 2025

USDCAD: open 1.3664, overnight range 1.3649-1.3684, close 1.3679

USDCAD fell from a peak of 1.3732 to a low of 1.3653 after the Bank of Canada held its overnight rate steady at 2.75%. The move had less to do with the BoC’s decision and more to do with how markets interpreted the latest US jobs data (ADP and JOLTS). Traders concluded that the Fed is now likely to deliver three rate cuts before year-end and that fueled wide-spread US dollar selling.

Prime Minister Mark Carney has yet to decide whether to retaliate against Trumps 25% increase on steel and aluminum tariffs to 50%. He said “The latest tariffs on steel and aluminum are unjustified, they’re illegal, they’re bad for American workers, bad for American industry, and of course for Canadian industry as well.” However, he does not want to jeopardize the possibility of a deal which could be announced at the June 17 G-7 meeting. Ontario Premier Doug Ford and other premiers want immediate retaliation with Ford musing about an electricity export tax.

WTI oil prices consolidated yesterday’s losses in a 62.52-63.16 range with sellers emerging after Saudi Arabia cut its benchmark price for crude, but less than expected.

BoC Deputy Governor Sharon Kozicki will discuss yesterday’s monetary policy decision today at 12:15 pm in Toronto.

Canada International Merchandise Trade deficit widened sharply, to $7.14 billion from [email protected] billion in March.

The US weekly jobless claims report rose 7,000 to 240,000 rather than dropping 5,000..

USDCAD Technicals

The intraday USDCAD technicals are bearish while trading below 1.3740 and looking for a break below 1.3650 to target the 1.3550 zone.  However, the intraday RSIs suggest USDCAD is deeply oversold and vulnerable to a bounce toward the 11.3720-40 resistance zone.

The medium term technicals are bearish below 1the 200 day moving average at 1.4026 and it is guarded by resistance in the 1.3740 and 1.3660 area. A decisive close below 1.3600 suggests further losses to 1.3450.

For today, USDCAD support is at 1.3650 and 1.3600. Resistance is at 1.3710 and 1.3740
Today’s Range: 1.3600-1.3700

Chart: USDCAD daily

FX at a Glance

Big Beautiful Abomination

There is a rift in the space-time continuum. The Trump/Musk bromance appears to have fractured after Elon criticized the $2.5 trillion increase in the deficit which will occur if the Bill is passed. Musk said, “A new spending bill should be drafted that doesn’t massively grow the deficit. America is in the fast lane to debt slavery.”

Blame Powell for Higher Rates
The US Economist in Chief, Donald J Trump, blissfully unaware of the economic risks posed by his tariff war, thinks the Fed should be cutting rates now. He tweeted in Trump-style “ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” Powell continues to ignore him.

EURUSD
NY Open: 1.1419 Overnight Range: 1.1405-1.1435
EURUSD hung on to yesterday’s gains which were fueled by rising Fed rate cut hopes, then consolidated the move. The ECB cut interest rates by 25 bps and hinted at more rate cuts to come by downgrading inflation forecasts again while leaving GDP forecasts unchanged.  Trading is likely to get messy around the 10 am ET option expiry window with around $13.2 billion of strikes between 1.1350 and 1.1430 rolling off.

GBPUSD
NY Open: 1.3565, Overnight Range: 1.3541-1.3575
GBPUSD is tracking broad US dollar moves vs the majors. Prices continue to be supported by EURGBP selling pressures due to wide ECB/UK interest rate spreads that favour GBPUSD. The GBPUSD uptrend is intact while prices are above 1.3460.

USDJPY
NY Open: 143.22, Overnight Range: 142.53-143.40
USDJPY is consolidating yesterday’s losses and has a bearish bias below 143.90. Improved risk sentiment on higher odds for Fed rate cuts led to safe-haven yen trades being unwound. The retreat was supported by the fall in the US Treasury yield to 4.345% today from 4.47% yesterday.

AUDUSD
NY Open: 0.6510, Overnight Range: 0.6486-0.6515
AUDUSD is at the top of its overnight range and is near the middle of the uptrend channel bound by 0.6470 and 0.6560. The gains were driven by broad US dollar losses on speculation of more aggressive Fed rate cuts and the China Caixin Services report which was a tad better than in April.

NZDUSD
NY Open: 0.6047, Overnight Range: 0.6025-0.6052
NZDUSD traded firmer despite expectations for additional RBNZ rate cuts because the focus was on the outlook for US interest rates.

USDMXN
NY Open: 19.2167, Overnight Range: 19.2015-19.2484
USDMXN continues to trade with a negative bias despite tariff issues and a dovish central bank. The intraday technicals are bearish below 19.4120 and looking for a test of the 19.0000 zone. Mexican President Claudia Sheinbaum has yet to accept Prime Minister Mark Carney’s invitation to the G-7 Summit.

China

PBoC fix:  7.1865 vs exp. 7.1762 (Prev. 7.1866)

Shanghai Shenzhen 300 rose 0.23% to 3877.56

Caixin May Services PMI 51.1, forecast 51.1, previous 50.7

EU and China agree to a new round of trade talks, but the date has not been set.  EU officials are already upset at China for restricting rare-earth exports, just because the EU is restricting all kinds of Chinese imports.

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

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