July 20, 2025
USDCAD open: 1.4030, overnight range 1.4003-1.4053, close 1.4021
USDCAD is near the top of its overnight range in early NY trading as it consolidates its recent losses stemming from narrowing CAD/US interest rate differentials. The 10-year CAD/US interest rate differential is -99.2., while the 2-year is steady at -131.2.
Canadian inflation cooled more than expected mainly due to falling gasoline prices which dropped 10.2% m/m.
The BoC preferred measures, Trim and Median did dip under 2% (1.8% and 1.9% respectively), but with core services still running hot, most notably traveller accommodation and air transportation both accelerating on World Cup-driven travel demand, there is no urgency for a September cut.
Traders bought USDCAD in a knee-jerk reaction as the inflation reading also suggests that the BoC does not need to raise rates.
WTI oil prices trade choppily in a 80.97-84.59 range and are 81.56 in NY. The latest US and Iran attacks have halted shipping in the Strait of Hormuz.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while trading below the 1.4060 area and looking for a decisive break below 1.4000 for a test of 1.3960. A move above 1.4060 targets 1.4120.
Longer term, USDCAD is bearish below 1.4110 and looking for a move to 1.3960. Momentum indicators show are no longer oversold, leaving room for further downside.
For today: USDCAD support is at 1.4000 and 1.3960. Resistance is at 1.4070 and 1.4090.
Today’s expected range is 1.4000-1.4070
FX Heat Map
FX open high low 6:00 am
Iran and US are Still at It
Trump’s war on Iran has entered its 143rd day, which is an impressive feat for a country that, according to Trump on March 6: “Their army is gone. Their navy is gone. Their communications are gone. Their leaders are gone… Their Air Force is wiped out entirely. They have 32 ships. All 32 are at the bottom of the ocean.”
The weekend hostilities were not very alarming to global markets although they traded with a mixed to cautious bias. Oil remains the main stress point, but European equities, Treasuries, and FX have traded with selective risk aversion.
Following the Money
Q2 earnings season kicked off last week with stellar earnings from the likes of JPMorgan Chase, B of A and Goldman Sachs. This week, Big-Tech earnings are in the spotlight with Alphabet and Tesla on tap. There are no top tier US economic reports today.
Taking Stock
In Asia, Japanese markets were closed. Hong Kong’s Hang Seng rose 2.36% and the Australian ASX 200 ended unchanged.
As of 5:45 am, European bourses are higher except for the UK FTSE 100 index which is down 0.25%. The French CAC 40 is up 0.38%, and the German DAX has gained 0.30%. S&P 500 futures are up 0.39%, the 10-year Treasury yield is 4.562%, the DXY is 100.88 and gold is 4,010.54.
EURUSD | Range 1.1423-1.1450
EURUSD didn’t stray too far from Friday’s 1.1440 closing level despite the weekend US and Iran attacks and the rise in crude prices. Spanish traders were celebrating their World Cup win while French traders were drowning their sorrows with their favourite plonk. Traders are also cautious ahead of Thursday’s ECB meeting.
GBPUSD | Range 1.3439-1.3481
GBPUSD inched higher in quiet trading overnight. The UK gets a new Prime Minister today when Andy Burnham is sworn in to replace Keir Starmer. More than likely, Labour backbenchers are already looking for Mr. Burnham’s successor. The Rightmove House Price index fell -0.1% m/m in July compared to -0.5% in June. The intraday GBPUSD technicals are bullish above 1.3410 and looking for a test of 1.3510.
USDJPY | Range 162.24-162.58
USDJPY markets were closed for Marine Day and the currency traded narrowly. The rise in crude prices underpinned the currency pair but as usual, lingering FX intervention fears limited gains.
AUDUSD | Range 0.6964-0.7015
The Australian dollar traded sideways in a quiet session, supported by downgraded risks for a Fed rate hike in September against a somewhat hawkish RBA outlook and a slight increase in negative risk sentiment.
USDMXN | Range 17.4609-17.5596
USDMXN retreated from its overnight peak on the back of US Secretary of State Marco Rubio’s comments that the US is still open to negotiating with Iran. US and Mexican trade reps are meeting in Mexico to discuss trade, although Mexican Secretary of Foreign Affairs Roberto Alvarez said that Mexico had no interest in a bilateral agreement that jeopardizes the USMCA.
CHINA
- PBoC Fix: 6.7934 vs exp. 6.7734 (prev. 6.7909)
- Shanghai Shenzhen CSI 300 rose 1.53% to 4,598.32
China left its benchmark Loan Prime Rates unchanged in July, with the one-year LPR holding at 3.00% and the five-year rate remaining at 3.50%.
Focus is now on the upcoming Politburo meeting around the end of the month, where China’s leadership is expected to unveil fresh fiscal stimulus, including faster government bond issuance, following weaker second quarter growth.
China also warned it may respond after the UK nationalised British Steel, previously owned by Jingye Group, if the interests of Chinese companies are harmed.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
