June 12, 2025

USDCAD: open 1.3648, overnight range 1.3622-1.3676, close 1.3673

USDCAD is the laggard among G-7 currencies falling just 0.25% overnight on the back of wide-spread US dollar selling pressure. Cooler than expected US CPI data yesterday, combined with a sharp drop in US treasury yields and a spike in demand for safe-haven currencies (JPY,CHF, EUR) fueled the sell-off.

USDCD fell below the overnight low at 1.3643 on the back of the weekly jobless claims numbers will managed to knock the 10-year Treasury yield lower.

Canadian officials are reportedly in deep discussion with their US counterparties on a trade and security deal, which are described as an attempt at resetting the Canada US relationship. A reset is probably as pipe dream as long as Trump is President.

WTI oil jumped from 64.66 yesterday to 69.03 in early Asia despite a 3.64-million-barrel drawdown in US crude inventories in the previous weak. The spike was triggered by reports of an imminent Israeli airstrike on Iran and news that the US was evacuating personnel from Iraq and Afghanistan. Prices retreated in Europe and are trading at 66.97 in NY.

The weekly jobless claims data rose by 248,000 (forecast 240,000). Last weeks number was revised up by 1000 to 248,000. May Producer Price Index rose to 2.6% from 2.5%.

USDCAD Technicals

The intraday USDCAD technicals are bearish while prices are below 1.3670 and looking for a decisive break below the 1.3600-1.3610 support zone to extend losses to 1.3550. A move above 1.3670 would meet resistance at 1.3710.

The medium term technicals remain bearish with prices below the key moving averages and targeting the 2024 low of 1.3430 on a break below 1.3600.

For today, USDCAD support is at 1.3610 and 1.3580. Resistance is at 1.3670 and 1.3710
Today’s Range: 1.3580-1.3670

Chart: USDCAD daily

FX at a Glance

Hyperbole-Thy Name is Trump

President Trump is verbose and rarely lets facts get in the way of any comment or tweet. Wednesday, following US/China trade talks in the UK, Trump trumpeted on his TruthSocial soapbox “OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME.” Financial markets initially reacted like Trump’s version of “Deal” was the same as the traditional meaning of the word. They changed their tune when they noticed that Chinese authorities were far more circumspect. According to the SCMP, the People’s Daily (official press agent of the Chinese government) described the London talks as “a step toward solving trade disputes.” Nary a word about a deal.

99 (Israeli) Luftballons
Ayatollah Khamenei will be looking skyward for red balloons for the next few days. The NYT reports that Israel is poised to interrupt Iran’s nuclear bomb-making efforts (again) by bombing all enrichment facilities and weapons sites in Iran. The Israeli Air Force has unfettered access in Iranian airspace having destroyed most of Iran’s air defences in a raid last year. Concern about the impending attack has led to the US evacuating diplomats from Iraq and Afghanistan.

US Inflation Data Renews Fed Rate Cut Hopes
Traders have raised the odds that the Fed will cut its overnight rate by 25 bps to 4.25% to around 72% after the CPI data released yesterday was a tad cooler than expected. The initial reaction was something like “oh boy, tariffs are not causing prices to rise.” But as usual the initial reaction was wrong. Consumers and businesses front-loaded purchases to beat the tariffs, which goes a long way in explaining the cool inflation number. That sentiment, combined with scepticism around the US/China trade “deal” and escalating Middle East tensions, fueled risk-aversion trades around the globe.

Equities Go South
The risk-off sentiment that led to a negative close on Wall Street permeated Asian equity indexes. Hong Kong’s Hang Seng fell 1.36%, Australia’s ASX 200 lost 0.31%, and Japan’s Topix dropped 0.21%.
European bourses traded negatively as well, led by a 0.89% decline in the German Dax which is lower than the pre-jobless claims data level, and a 0.47% fall in the French CAC 40. S&P 500 futures are down 0.27% (as of 5:45 am PDT. The US 10-year Treasury yield dropped from 4.48% yesterday to 4.38% today, then down to 4.34%, post jobless claims. Gold (XAUUSD) climbed to 3390.50.

EURUSD
NY Open: 1.1573, Overnight Range: 1.1485–1.1589
EURUSD caught a bid yesterday, rallied hard again overnight and extended the gains to 1.1632 after todays US data. .The single currency is underpinned by recent hawkish comments from ECB officials that are pushing back against calls for additional rate cuts. Lingering chatter about promoting the euro as a reserve currency also contributed to the rally. The technical picture is bullish.

GBPUSD
NY Open: 1.3577, Overnight Range: 1.3523–1.3594
GBPUSD traded with a bullish bias and extended its overnight rally to 1.3620 in the wake of the US jobless claims report.  Today’s rally occurred despite weaker-than-expected April GDP, which fell 0.3% (forecast -0.1, previous 0.2%). The drop was not much of a surprise as it was largely due to the front-loading effect ahead of Trump tariffs. Industrial Production and Manufacturing Production were weaker than expected and for the same reason.

USDJPY
NY Open: 143.69, Overnight Range: 143.57–144.57
USDJPY dropped steadily yesterday and continued to do so overnight and this morning. Reaching 143.19 after the US data. Safe-haven demand for yen and the drop in US Treasury yields fueled the move. Former BoJ policymaker Takako Masai warned that further BoJ rate hikes are at risk due to the impact of Trump tariffs on exports.

AUDUSD
NY Open: 0.6499, Overnight Range: 0.6477–0.6519
AUDUSD traded sideways and was unable to make much headway because renewed tariff concerns between China and the US offset selling pressure from US rate cut expectations.

NZDUSD
NY Open: 0.6035, Overnight Range: 0.6006–0.6043
NZDUSD remained rangebound and was unable to make much headway despite widespread US dollar selling pressures vs. the majors. Traders remained cautious because of the lack of details with the so-called China/US trade deal touted by Trump.

USDMXN
NY Open: 18.9581, Overnight Range: 18.8960–18.9810
USDMXN ignored weak industrial output data and dropped sharply to 18.8260 in the wake of the cooler-than-expected US inflation data yesterday. USDMXN rebounded overnight but fell short of resistance at 19.000 and is trading near the session low in NY.

China

PBoC fix:  7.1803 vs exp. 7.1703 (Prev. 7.1815)

Shanghai Shenzhen 300 fell 0.06% to 3892.20

China flips the bird at America with plans to increase the number of African countries permitted to export to the country tariff-free, from 33 to 53.

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

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

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