July 21, 2025
USDCAD open: 1.4057, overnight range 1.4056-1.4087, close 1.4071
USDCAD climbed steadily yesterday after Monday’s tame CPI data downgraded Bank of Canada rate hike risks. Prices climbed further when the Trump announced a new round of tariffs on Canada.
The tariffs are a blatant attempt to deflect American attention away from his complete and utter bungling of the Iran war. They are also a negotiating tactic as Trump tries to secure another advantage. But even Trump knows he can’t afford to choke off Canadian oil, electricity, or potash, so those are conveniently exempt. He wants to ensure Americans don’t lose their power or their food supply.
WTI oil prices bounced around in a 81.41-83.58 range and they are at the top of that band in NY trading. Traders were torn between escalating tensions and ceasefire hopes. The Houthis blockaded Saudi Red Sea exports, US-Iran airstrikes continued, and Hormuz traffic collapsed. However, reports of a proposed 10-day US-Iran ceasefire to revive a June agreement capped gain, preventing a sharper breakout in either direction.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish while trading below 1.4090, and looking for a decisive break below 1.4020 for a test of 1.4000, then 1.3960. A move above 1.4090 targets 1.4120.
Longer term, USDCAD is bearish below 1.4110 and looking for a move to 1.3960. Momentum indicators 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 1.4000-1.4090
FX Heat Map
FX open high low 6:00 am
Middle East Drama Expands
Iran is reportedly offering another 10-day ceasefire and the US has countered with demands for it to be longer and the partial reopening of the Strait of Hormuz. The US may be motivated because Trump’s war is in danger of spiralling out of control.
Yemen’s Houthis are an Iranian-backed rebel group that controls the capital (Sana) and the most populous areas in the north and west. They announced a naval blockade of Saudi Arabia which means closing the Bab-el-Mandeb Strait, a major export waterway for Saudi crude. A full closure would reduce global oil supplies by 7%. Once again, Iran trumped Trump.
The US dollar remains bid but rangebound due to a lack of actionable American data and caution due to Middle East developments.
Taking Stock
In Asia, Japanese markets reopened and the Topix rallied 2.44%. Hong Kong’s Hang Seng and the Australian ASX 200 ended unchanged.
As of 5:30 am PT, European bourses are slightly higher. The UK FTSE 100 index is up 0.15%, the French CAC 40 is flat and the German DAX has gained 0.17%. S&P 500 futures are up 0.37%, the 10-year Treasury yield is 4.598%, the DXY is 101.01 and gold is 4,061.51
EURUSD | Range 1.1409-1.1429
EURUSD traded narrowly. Traders were not eager to commit in any direction due to conflicting Middle East narratives. Will the Houthis’ involvement expand the conflict, or will it encourage the US to agree to another ceasefire? The ECB meeting is Thursday and no change in rates is expected.
GBPUSD | Range 1.3384-1.3455
GBPUSD is suffering from “new PM blues.” Prime Minister Andy Burnham pledged to adhere to fiscal rules after 10-year gilts underperformed other European bonds yesterday. His appointment of John Healey to Chancellor surprised markets. The bigger driver of sterling was a benign employment report that downplays the need for a rate hike. The unemployment rate was unchanged at 4.9%.
USDJPY | Range 162.43-162.80
USDJPY is trading at the top of its overnight band due to firmer oil prices and the elevated risk of further disruptions to its crude supply. The ongoing Middle East conflict is hampering the BoJ’s ability to raise rates.
AUDUSD | Range 0.6964-0.7027
The Australian dollar traded higher on the back of improved risk sentiment although traders were cautious. Traders are looking ahead to Thursday’s employment data which is expected to show a gain of 15,000 jobs.
USDMXN | Range 17.3755-17.4377
USD/MXN is near its overnight session low due to reports that Iran and the US are talking ceasefire. improvement in global risk appetite supported emerging-market currencies and offset escalating Middle East tensions. However, the peso’s gains were limited after Bank of Mexico Deputy Governor José Gabriel Cuadra García warned that Banxico faces a “complex environment” with upside inflation risks persisting despite a recent decline.
CHINA
- PBoC Fix: 6.7934 vs exp. 6.7734 (prev. 6.7909)
- Shanghai Shenzhen CSI 300 rose 1.53% to 4,598.32
China’s stock market surge was a direct result of a massive, multi-pronged government intervention aimed at ending a two-week rout and restoring confidence by targeting the tech sector that had been the epicenter of the sell-off.
The actions included: record-breaking state purchases of tech ETFs, commitments from five major insurers to boost equity investments, share buyback announcements from over 40 listed companies, and regulatory pledges by the CSRC to ensure market stability.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
