October 3, 2025
USDCAD open 1.3964, overnight range 1.3958-1.3970, close, 1.3968
USDCAD inched higher yesterday and broke above resistance in the 1.3950 area but only saw limited follow-through. Prices are supported by the poor outlook for the Canadian economy in the face of American trade hostility and by the prospect that lower US interest rates would lead to further BoC rate cuts.
Bank of Canada policymakers are having another re-think about how it calculates inflation. The are considering how to treat problematic components like mortgage interest costs, which distort inflation when rates rise. It is also considering new approaches like multivariate core trend inflation (MCT) and even AI-based clustering techniques to refine signal extraction. It appears that the BoC is admitting it doesn’t have a good handle on inflation and wants to juggle the numbers to justify another rate cut.
WTI oil prices bounced off the low and traded in a 60.59-61.39 range. Crude was bought because of a fire at a major LA refinery and on speculation that Opec may increase production by more than expected at Sunday’s meeting.
The Canadian economic calendar is empty.
USDCAD Technical Outlook:
The intraday technicals are bullish while prices are above 1.3940. However, the RSI’s suggest prices are near the extreme overbought area combined with resistance from the 200-day moving average at 1.3987 point to a retest of the 1.3940 area, which if broken would extend losses to 1.3890
The medium-term technicals are bullish above 1.3760 and looking for a break above resistance in the 1.4025 area to extend gains 1.4110. However, the momentum indicators suggest that the uptrend is weak and point to more 1.3750-1.4000 range trading.
For today, USDCAD support is 1.3880 and 1.3940. Resistance is 1.3990 and 1.4020. Today’s Range: 1.3890-1.3990
NFP Data Ready but Unreleased
The US September nonfarm payrolls report was not released as scheduled due to the US government shutdown. If it ever gets released, it is expected to show a gain of 50,000 jobs compared to just 22,000 in August, with an unemployment rate of 4.3%, unchanged from August. The ISM Services PMI is expected to drop to 51.7 from 52, and those will be released on schedule at 10:00 am EDT.
Taking Stock
Asian equity indices followed Wall Street’s lead and closed with gains. Japan’s Topix rose 1.35% and Australia’s ASX 200 gained 1.57%. The Hang Seng index closed down 0.54% but still finished the week with a 1.06% gain.
As of 5:50 am PDT, European equities are posting gains. The UK FTSE 100 index has risen by 0.53%, but the French CAC-40 index and German Dax have turned earlier gains into losses. The former is down 0.09%, and the latter has shed 0.24%. S&P 500 futures are up 0.08%, and the U.S. dollar index (DXY) is 97.81. Gold (XAUUSD) is 3870.61 while the U.S. 10-year Treasury yield is 4.09%.
EURUSD
EURUSD is drifting near the top of its 1.1710-1.1745 range. Eurozone September Composite PMI ticked up to 51.2 from 51.0, while Services PMI rose to 51.3 from 50.5. The official report quoted Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, who said: “Things are running a little bit more smoothly in the service sector. After almost stagnating in August, business activity picked up more strongly in September. This recovery is practically broad-based geographically, with moderately robust growth observed in Germany, Italy, and Spain.” The news provided the single currency with a bit of support.
GBPUSD
GBPUSD trickled higher in a 1.3429-1.3468 range despite the UK Services PMI showing service sector growth dipped to a five-month low. The report noted that “UK service providers experienced a disappointing end to the third quarter as weak consumer confidence, delays to business spending decisions and falling exports all weighed on demand.” The intraday GBPUSD technicals are bullish above 1.3390.
USDJPY
USDJPY chopped about in a 147.10-147.82 range. Better-than-expected Japanese service sector PMI data, which showed the economy expanding for the third quarter, was offset by somewhat dovish comments from BoJ Governor Kazuo Ueda, who warned: “If uncertainty regarding overseas economies and trade policies remains high, firms may place stronger emphasis on cost-cutting and may weaken their efforts to reflect price increases in wages.”
AUDUSD
AUDUSD is at the top of its 0.6589-0.6610 range. Prices got a bit of support from Services PMI data, which showed the service sector continuing to expand.
USDMXN
USDMXN eased lower, falling from 18.4398 overnight to 18.3830 in early NY. Mexican/US interest rate differentials undermined prices, while the downside was limited by caution due to the US government shutdown and its delay of economic data.
USDCNY
PBoC fix: 7.1055 vs exp. 7.1166 (Prev. 7.1089) – CLOSED
Shanghai Shenzhen CSI 300 rose 0.45% to 4640.69 – CLOSED
China’s Golden Week holidays continue
FX High, Low, Open
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics
