May 5, 2026
USDCAD open: 1.3612, overnight range 1.3612-1.3630, close 1.3626
USDCAD is underpinned by negative risk sentiment due to the US efforts to force a reopening of the Strait of Hormuz threatening to end the ceasefire. Day one of US navy ships escorting vessels through the Strait was hardly a success and both sides traded missiles.
Bank of Canada Governor Tiff Macklem told the Senate Finance Committee that “uncertainty around inflation is unusually elevated” which is Bank-speak for warning Canadian interest rates may need to be increased. His comments were not a surprise.
WTI oil prices traded sideways overnight but are in an uptrend while prices are above 98.50. The increased risk of a fresh outbreak of hostilities between Iran and the US, exacerbated by Tuesday’s news of an explosion and fire on a South Korean cargo ship in the Strait.
Canada’s February trade deficit of -$5.11 billion became a surprising $1.78 billion surplus, the first since September 2025. The US Trade deficit widened from -$57.8 to -$60.3 billion in the same period.
Still to come: US JOLTS Job openings, ISM Services PMI, and New Home Sales.
USDCAD Technical Outlook
The intraday technicals are bearish while trading below 1.3650, a level being guarded by resistance at 1.3630. A break below 1.3600 targets 1.3550.
The daily downtrend from the April highs remains intact below 1.3720, which is also guarding the confluence of the 100-day SMA at 1.3794 and 200-day SMA at 1.3808. Daily Momentum indicators are neutral to marginally bearish.
For today, USDCAD support is at 1.3580 and 1.3540. Resistance is at 1.3630 and 1.3650. Today’s range: 1.3570-1.3630.
FX Heat Map (6:00 am) one week
FX open high low 6:00 am
US and Iran Ceasefire Still Holding
The US and Iran ceasefire is officially in place although the IRGC troops manning the small boats which were blown out of the water by the Americans may disagree. So do UAE officials, after one of its ports suffered a drone attack which caused a fire. Iranian negotiator Mohammad Ghalibaf said American actions endangered shipping.
But according to Trump, everything is going as planned. He told small business guests that the economy was “roaring.” (so are gas prices). He also said the hundreds of thousands of Federal workers he fired, were thanking him because they got better jobs.
Taking Stock
Asian equity market activity was muted due to ongoing holidays with Japan and mainland China markets closed. Australia’s ASX 200 fell 0.19% while Hong Kong’s Hang Seng lost 0.76%.
As of 7:20 am, the German DAX is up 1.23%, the French CAC 40 has risen 0.55% while the UK FTSE 100 has lost 1.13%. S&P 500 futures are up 0.29%, the 10-year Treasury yield is 4.436%, the DXY is 98.52, and gold (XAUUSD) is 4,555.61.
EURUSD | Range: 1.1677-1.1699
EURUSD drifted sideways in a narrow band due to fears that the US and Iran ceasefire could unravel. The Iranians have managed to keep the Strait of Hormuz effectively closed despite the massive US naval presence and Trump’s promise to have the navy escort ships through the Strait. Steady to firmer Brent oil prices are weighing on the single currency.
GBPUSD | Range: 1.3514-1.3550
GBPUSD trickled higher due to rising risks for the Bank of England to hike rates and because Brent oil prices ebbed slightly. Traders are content to see today’s US data and assess its inflationary impact.
USDJPY | Range: 157.09-157.84
USDJPY traded fairly quietly as it is the last day of the Golden Week holidays which have closed Japanese markets. The BoJ did not appear to intervene leaving prices underpinned by a hawkish outlook for the Fed and high oil prices.
AUDUSD | Range: 0.7136-0.7183
AUDUSD rebounded after the RBA surprised no one and hiked its benchmark rate to 4.35% from 4.10%. Even so, the rally fell short of yesterday’s peak. RBA Governor Michele Bullock cited rising inflation from higher fuel prices as a result of the Iran war to justify the rate increase. She also said that rates were “restrictive” implying it was the last rate hike for a while.
USDMXN | Range: 17.4480-17.5423
It’s Cinco de Mayo and Mexican markets are closed today. The currency pair is supported by the hawkish Fed outlook and geopolitical tensions.
China
USDCNY Fix: Closed for May Day
Shanghai Shenzhen CSI 300 closed for Labour Day 3
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
