July 8, 2028
USDCAD open: 1.4160, overnight range 1.4155-1.4209, close 1.4202
USDCAD dropped on the heels of spiking oil prices and a very modest narrowing of 2 and 10-year CAD/US interest rate spreads. However, the ongoing uncertainty around CUSMA will limit upside moves.
Canada’s trade surplus widened to $4.2 million in May, and it is a result of surging oil prices while higher metal and mineral exports contributed.
WTI oil prices soared over 6.0% overnight and are trading in NY at 73.61, for a 4.50% gain. Trump also reimposed sanctions on Iranian oil.
There are no US or Canadian economic reports on tap today except for the US FOMC minutes later this afternoon.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.4200, but the hourly RSI is no longer oversold suggesting the downside momentum is fading. A decisive break below 1.4150 targets 1.4100, while a move back above 1.4200 shifts the focus to 1.4250.
The longer-term outlook remains bullish above 1.4150, where the ascending channel from the June low guards the broader uptrend, with the 200-day moving average rising at 1.3840. However, the daily RSI easing to 58 from extreme overbought levels alongside a negative daily MACD warns the corrective phase may not be complete.
For today: USDCAD support is at 1.4150 and 1.4100. Resistance is at 1.4200 and 1.4250. Today’s expected range is 1.4140-1.4220.
FX Heat Map
FX open high low 6:00 am
Trump on the War Path (Again)
Trump re-started his war with Iran. He declared that the interim agreement was over after launching a new wave of attacks on the country. Trump also called Iran’s leadership “liars,” which is the epitome of the pot calling the kettle black. Iran said they responded with 85 attacks of their own, aimed at US military bases in Bahrain and Kuwait.
Trump turned his wrath on NATO and criticized the membership for not supporting his attack on Iran, despite not involving them in the planning. He also went on a rant on Spain, calling them “terrible people” and telling Treasury Secretary Bessent to cut off all trade with Spain.
As would be expected, WTI oil prices spiked, the US dollar caught a bit of a bid, global stocks dropped and the 10-year Treasury yield jumped.
Iran Shunts FOMC Minutes to Background
Markets were just getting used to the idea that the worst of the US and Iran war was over and were eagerly awaiting today’s release of the FOMC minutes from the June 17 meeting. Analysts wanted to parse the document to see if the degree of market-hawkishness following Warsh’s press conference was warranted. They still do, but Trump is on a rampage in Europe, and until he gets back on his meds, risk aversion trading will prevail.
Taking Stock
The re-start of the US and Iran war and the ongoing bail-out of once high-flying stocks that benefitted from AI spending sank global equity markets.
Asian equity indexes closed negatively except for Hong Kong’s Hang Seng, which rose 2.99%. Japan’s Topix dropped 1.37%, and Australia’s ASX 200 lost 0.21%.
As of 5:30 am PT, European bourses are deep in negative territory but off their worst levels. The German Dax and the French CAC are down 1.68%, while the UK FTSE 100 has dropped 0.94%. S&P 500 futures are down 0.61%, the 10-year Treasury yield is 4.565%, the DXY is 101.15, and gold (XAUUSD) is 4,071.78.
EURUSD | Range 1.1396-1.1432
EURUSD traded cautiously amid the new hostilities in the Middle East and Trump saying he would ban all trade with Spain. It sounds like an empty threat, as Spain is an EU country. Does that mean all EU trade is banned? Not likely. That helps to explain the minimal EURUSD reaction to his threat.
GBPUSD | Range 1.3322-1.3371
GBPUSD dropped on the back of higher oil prices, which risk exacerbating domestic economic weakness. Trading was uninspired due to caution around the latest US action in Iran and Trump’s comments about Spain with the FOMC minutes looming in the background. GBPUSD intraday technicals are bullish above 1.3300.
USDJPY | Range 161.97-162.56
USDJPY traders overcame intervention fears and drove the currency higher on the back of elevated geopolitical tensions, sharply higher oil prices, and a jump in US Treasury yields. Prices are also supported by Prime Minister Sanae Takaichi’s fiscal policies that will ramp up spending.
AUDUSD | Range 0.6906-0.6947
The currency pair is in the middle of its overnight range and held up rather well in the face of the latest geopolitical tensions. RBA Assistant Governor Sarah Hunter delivered some hawkish comments about supply shocks impacting inflation, which could trigger further rate hikes. And helping to reinforce her message was New Zealand’s RBNZ, which raised rates by 25 bps to 2.5% due to inflation risks.
USDMXN | Range 17.3748-17.4331
USDMXN reacted to broad US dollar demand following the re-start of Trump’s Iran war. The market perception of higher Fed interest rates while Banxico remains on hold is providing additional support.
CHINA
- PBoC Fix: 6.8077 (prev. 6.8054)
- Shanghai Shenzhen CSI 300 fell 1.03% to 4,792.96
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
