July 6, 2028
USDCAD open: 1.4229, overnight range 1.4191-1.4233, close 1.4199
USDCAD traded with a bid due to broad-based demand for US dollars and is at its session high in NY trading. Prices were supported by wide-CAD/US interest rate spreads due to divergent BoC and Fed monetary policy outlooks. Analysts believe the Fed is leaning hawkish while the BoC is on hold.
The Bank of Canada Business Outlook Survey (BOS) and Consumer Expectations Survey are released this morning. Consumers will not be surprised to learn that the surveys will show increased inflation expectations. Even so, at current BoC inflation levels, interest rates are not going anywhere.
WTI oil prices are trading sideways in a 67.83-69.20 band with the topside limited by news OPEC announced another 188,000 b/d increase in production for August. More importantly, supply is expected to substantially exceed demand in 2027 as this chart from Reuters shows.
USDCAD Technical Outlook
The intraday USDCAD technicals are bullish above the 1.4200-05 area following the bounce from last week’s pullback low. A decisive break above 1.4240 targets 1.4280, while a move below 1.4200 shifts the focus back to 1.4140.
The longer-term outlook remains bullish above 1.4100, where the ascending trendline from the May low guards the broader uptrend, with the 200-day moving average rising at 1.3836. However, the daily RSI easing from extreme overbought levels alongside a marginally negative daily MACD histogram warns the corrective phase may not be complete. A close below 1.4100 unlocks a move to 1.4050, ahead of 1.3990. A recovery above 1.4260 negates the corrective setup and puts 1.4400 back in play.
For today: USDCAD support is at 1.4200 and 1.4160. Resistance is at 1.4240 and 1.4270. Today’s expected range is 1.4170-1.4250.
FX Heat Map
FX open high low 6:00 am
Sleepy Start to the Week
There isn’t a whole lot of anything on the docket to get traders excited today except ISM Services PMI data (forecast 54, May 54.5). Tuesday, NZDUSD traders will focus on the RBNZ rate decision, where there is a good chance that policymakers hike rates by 25 bps to 5.50%. On Wednesday afternoon, the FOMC minutes from the June 17 meeting, which were deemed hawkish, are released. Friday, Canada releases its Labour Force Survey for June.
NATO Summit Ahead
Trump is off to Turkey today to put NATO right. He is still annoyed that NATO members failed to respond to his calls for assistance in bungling the attack on Iran. There is a real risk that Trump will scale back participation in the essentially, European defense group, making those nations responsible for there own security. Trump’s comments about annexing Greenland made European leaders realize that Russia wasn’t the only threat to their security.
Taking Stock
Asian equities were mixed with Hong Kong’s Hang Seng rising 1.14%, Japan’s Topix gaining 0.92%, while Australia’s ASX 200 fell 0.15%.
As of 5:30 am PT, European bourses are flat to negative. The German Dax and French CAC 40 are flat while the UK FTSE 100 is down 0.32%. S&P 500 futures are up 0.39%, the 10-year Treasury yield is 4.458%, the DXY is 101.08, and gold (XAUUSD) is 4,140.37.
EURUSD | Range 1.1410-1.1442 EURUSD trickled lower in a quiet session with prices still weighed down by reduced expectations of a September rate hike. Concerns around Trump and NATO and renewed US dollar demand from hawkish FOMC minutes are also weighing on the single currency. Traders ignored Eurozone data, which included May PPI (actual 5.9% y/y vs forecast 5.7%), Retail Sales (May actual 1.6% vs 0.9% in April) and July investor confidence data (actual -3.1, previous -13.4).
GBPUSD | Range 1.3329-1.3357 GBPUSD traders continue to deal with shifting BoE monetary policy expectations and speculation about who Andy Burnham will select to be Chancellor, replacing Rachel Reeves. Burnham could be sworn in as PM on July 20. GBPUSD losses are limited after EURGBP broke below a key technical level which squeezed stale GBP short positions. Weaker than expected Construction PMI (actual 38.4, forecast 40, previous 38.2) was a non-event.
USDJPY | Range 161.28-162.40 The US holiday weekend came and went without any sign of BoJ intervention and traders reacted by buying the currency pair. USDJPY bulls were emboldened despite the tame NFP data released on Friday due to fears that the FOMC minutes will reinforce a hawkish Fed bias.
AUDUSD | Range 0.6922-0.6945 Aussie traded narrowly but with a modest bid due to general US dollar demand. Soft inflation data (TD-MI Inflation gauge was -0.4% m/m in June, vs -0.3% m/m in May, and 3.9% y/y vs 4.4% in May) reduced the risk for a near-term RBA rate hike.
USDMXN | Range 17.4633-17.4878 USDMXN traded very quietly and continued to consolidate the losses following the weaker-than-expected US NFP data released last Thursday.
CHINA
- PBoC Fix: 6.8066 vs exp. 6.7850 (prev. 6.8047)
- Shanghai Shenzhen CSI 300 rose0.18% to 4,842.00
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
