June 3, 2026

USDCAD open: 1.3857, overnight range 1.3832-1.3859, close 1.3840

USDCAD traded with a modest bid overnight, but inside yesterday ‘range, due to renewed risk aversion after the US and Iran violated their ceasefire agreements.

The Canada and US CUSMA review kicked off yesterday when Trade Minister Dominic LeBlanc flew to Washington.  Trump set the tone for the meeting with a Truth Social tweet “51^st State.”

The meeting occurred even as the US Trade Representative Jameson Greer threatened Canada (and 59 other countries) with additional 10% tariffs using Section 301 claiming the countries supported forced labour, among other things. So why bother?

However, it wasn’t the political theater driving USDCAD but widening CAD/US interest rate spreads. The 2-year spread has widened by to 126.6 from 95.2 in the past month.

WTI oil prices surged 2.79% to 96.98 after Iran and the US fired missiles at each other. The Strait of Hormuz is effectively closed with only 3 vessels making the transition in the past 24 hours.

Today’s ADP employment change report showed the US added 122,000 jobs in May (forecast 117,000) which is additional support for the Fed leaving rates unchanged.  ISM Services PMI data is expected to tick up to 53.8 from 53.6.

USDCAD Technical Outlook

The intraday technicals are bullish above 1.3820 and looking for a break above the 1.3860 area to test the 1.3890-1.3920 resistance zone. A move below 1.3830 suggests a test of the 1.3790-1.3800 zone.

Longer term, USDCAD remains in its 2026 uptrend while prices are above 1.3570. The daily RSI is elevated but not yet extreme, and the MACD histogram is positive and expanding, arguing for a test of the 1.3890 resistance. A sustained break above that level opens the door to 1.3950. Failure there shifts the focus to 1.3760.

For today, USDCAD support is at 1.3830 and 1.3800. Resistance is at 1.3890 and 1.3920. Today’s range: 1.3830-1.3910.

FX Heat Map

FX open high low 6:00 am

Tariff Man Returns

Yesterday the U.S. Trade Representative (USTR) announced a proposal for new Section 301 tariffs on 60 economies over alleged failures to prohibit or effectively enforce bans on imports produced with forced labour.

Canada was among six jurisdictions cited for inadequate enforcement of existing restrictions, alongside Mexico, the European Union, Indonesia, Ecuador and Pakistan.

The proposal remains under consultation, with public comments due July 6 and hearings scheduled for July 7. If implemented, the measure would create another potential source of trade friction for Canada.

And that is why any trade deal with America is worthless.

Iran and US Trade Missiles, Again

US launched attacks on an Iranian oil tanker and a radar site. Iran’s obliterated army responded with missile and drone attacks on Kuwait’s airport and US military bases in Bahrain. Oil prices rose in response to the news and Trump continues to insist that talks with Iran are proceeding well.

Yield Spreads Widen

The US dollar has caught a bid and is opening in New York with gains across the board. Yesterday’s JOLTS Job Openings data surprised to the upside, rising around 711,000 to 7.6 million (forecast 6.88 million). The rebound in job openings suggests labour market conditions remain tighter than policymakers would like, reducing urgency for near-term rate cuts. The ADP data supports the view.

Taking Stock

Asian equity markets closed with gains except for Hong Kong’s Hang Seng Index which lost 1.56%. Japan’s Topix rose 1.83% and Australian ASX 200 gained 0.70%.

As of 5:30 am PT, European bourses are in the red due to renewed risk aversion sentiment. The German DAX is down 0.87%, the French CAC 40 has lost 0.30% and the UK FTSE 100 is down 0.36%. S&P 500 futures are down 0.14%. The 10-year Treasury yield is 4.497%, DXY is 99.38, and gold (XAUUSD) is 4,450.91.

EURUSD | Range 1.1605-1.1634

EURUSD was unable to sustain gains yesterday after the US JOLTS report reinforced the Fed’s case for leaving rates unchanged. However, the ECB is hawkish and a 25 bp rate hike on June 11 is baked into the FX rate which is helping to limit EURUSD losses. S&P Global Business Activity Index fell at the sharpest pace in 18 months. S&P Chief Economist Williamson wrote: “With business activity in the eurozone falling for a second successive month in May, it is looking increasingly likely that the economy will slip into contraction in the second quarter.”

GBPUSD | Range 1.3436-1.3472

Sterling drifted lower due to broad US dollar strength and soft domestic data. The headline seasonally adjusted S&P Global UK Services PMI Business Activity Index fell from 52.7 in April to 49.3 in May and weighed on the currency. The flare-up of hostilities in the Middle East was another negative.

USDJPY | Range 159.37-160.00

The latest jump in oil prices and the latest US data supporting a hawkish Fed drove USDJPY to test the BoJ’s resolve at 160.00. The move did not go unnoticed by Japanese officials. Prime Minister Sanae Takaichi said authorities stood ready to respond as needed. Jibun Bank Services PMI was unchanged at 50, as expected.

AUDUSD | Range 0.7152-0.7183

The Australian dollar bounced inside yesterday’s range with selling pressure seen following weaker than expected Q1 GDP which rose 0.3% q/q rather than the 0.5% predicted. Australian Services PMI at 47.7 was as expected and unchanged from April. The souring of global risk sentiment following the flare-up of hostilities between Iran and the US also weighed on prices.

USDMXN | Range 17.2713-17.3158

USDMXN traded sideways as renewed risk aversion sentiment for Middle East developments and a hawkish outlook for US interest rates underpinned the greenback.

CHINA

• PBoC Fix: 6.8184 vs exp. 6.7673 (prev. 6.8187)
• Shanghai Shenzhen CSI 300 rose 0.49% to 4,938.81

USDCNY slide stalled on renewed Middle East hostilities. Mixed PMI data argues that China’s economic recovery is fragile. Monday, RatingDog Manufacturing PMI was 51.8, a tad lower than 52.2 in April. Today RatingDog Services PMI rose to 54.4 , a tad higher than the 52.6 seen in May.

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview