May 29, 2026
USDCAD open: 1.3805, overnight range 1.3778-1.3808, close 1.3785
USDCAD has rallied about 0.94% this month primarily driven by US and Canada monetary policy speculation. In the US sinking consumer confidence, and rising inflation against a steady employment background fueled Fed rate hike speculation. In contrast, the Canadian economic data is soft and inflation is within the BoC target. Cana/US 2 year and 10-year interest rate spreads have widened sharply, in favour of the US. All of the above is occurring with an under-current of US dollar safe have demand from Trump’s war on Iran.
Yesterday’s release of the Bank of Canada’s Financial Stability Report painted a picture of a resilient economy facing rising external risks. Households, businesses and banks remain in generally sound financial condition, while inflation pressures appear contained. Policymakers hedged their bets with the usual warnings that trade uncertainty, geopolitical tensions and elevated asset valuations could amplify shocks, threatening growth and employment. The report’s tone suggests a neutral-to-easing interest rate bias.
WTI oil prices are trading a the bottom of its 87.05-89.03 overnight range after Reuters reported that Iran/US reached another 60 day ceasefire agreement,. The White House provided some clear insight into the negotiations. Deputy Chief of Staff for Policy Stephen Miller said “that there’s no deal until there’s a deal and nothing is final until it’s final, while he added that Trump has been clear that he reserves the option now or at any time in the future to do what is necessary to defend and protect US national security.” The problem is that Trump does not understand the meaning of “Deal.”
The Canadian economy is expected to have grown by 1.5% y/y in Q1 but be flat in March. The news will support the BoC leaving rates unchanged.
It is month end and that means portfolio rebalancing flows. USDCAD may come under pressure near 11:00 am as portfolio managers sell US dollars after the S&P 500 rose over 6% in May.
USDCAD Technical Outlook
USDCAD intraday technicals are bullish above 1.3770 and looking for a break above 1.3870 to extend gains to 1.3920. A break below 1.3870 puts 1.3730 in play.
USDCAD support in the 1.3800 area is looking vulnerable. Yesterday’s failure to clear 1.3820 after testing 1.3777 sets the stage for another downside move, with a target of 1.3740-50.
For today, USDCAD support is at 1.3770 and 1.3740. Resistance is at 1.3820 and 1.3940. Today’s range: 1.3730-1.3820
FX Heat Map
FX open high low 6:00 am
Greenback Finishing May with Gains
The US dollar racked up gains across the board in May. The only exceptions were the Japanese yen, which inched higher following BoJ intervention, and the Swiss franc on safe-haven demand. A lot of those gains could be eroded today due to month-end rebalancing flows, although the losses may be short-lived. Yesterday, US PCE inflation data showed inflation increasing at its fastest pace in three years, which supports calls for higher Fed rates.
At the moment, the media is reporting that the US and Iran have agreed to a 60-day ceasefire, but the news has not appeared on Trump’s Truth Social account. If a ceasefire is announced and Trump doesn’t post about it, is it real?
Taking Stock
Asian equities rallied on improved odds for another US/Iran ceasefire. Australia’s ASX 200 rallied 1.61% to finish the month with a 1.27% gain. Japan’s Topix jumped 1.41% for a 6.17% gain in the month. The Hong Kong Hang Seng was the underperformer. It rose 0.70% but still finished the month with a loss of 1.75%.
As of 4:30 am PT, European bourses are in the green led by a 0.75% gain in the French CAC 40. The FTSE 100 is up 0.32%, and the German DAX has gained 0.16%. S&P 500 futures are up 0.16%, the 10-year Treasury yield is 4.443%, DXY is 99.08, and gold (XAUUSD) is 4,528.46.
EURUSD | Range 1.1625-1.1656
EURUSD rallied yesterday on Iran/US ceasefire chatter and consolidated the gains overnight. The increased risk for a Fed rate hike has offset any EURUSD support from an ECB rate hike, but improved global risk sentiment and month-end rebalancing flows may see EURUSD try to reclaim 1.1700.
GBPUSD | Range: 1.3409-1.3451
GBPUSD gave back most of its Asia gains after Bank of England Governor Andrew Bailey repeated earlier remarks. He said “there was no immediate rush to raise interest rates, arguing that inflation could be allowed to run above the Bank’s 2% target temporarily due to uncertainty surrounding the Iran war and weak domestic growth.” The downside was supported by hopes for a US/Iran ceasefire.
USDJPY | Range: 159.18-159.38
USDJPY traded sideways, but gains were limited due to its proximity to the supposed BoJ intervention trigger zone in the 160.00 area. Reuters reported that the BoJ may pause its unwind of debt holdings (quantitative tightening) due to bond volatility and politics. Japanese retail trade rose 1.2% in April (forecast 1.3%), while the unemployment rate rose 2.5%, compared to 2.7% in March.
AUDUSD | Range: 0.7149-0.7168
AUDUSD traded narrowly due to shifting global risk sentiment and the lack of details around the reported US/Iran ceasefire.
USDMXN | Range: 17.3056-17.3483
USDMXN consolidated yesterday’s losses after the previous day’s rally failed at the 17.5000 area. Improving global risk sentiment and Mexico/US yield differentials undermined the currency. underpmined Prices were undermined yesterday after Mexico’s unemployment rate came in at a better-than-expected 2.5%.
CHINA
- 6.8176 vs exp. 6.7685 (prev. 6.8240)
- Shanghai Shenzhen CSI 300 fell 0.45% to 4892.12
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
