July 23, 2025
USDCAD open: 1.4082, overnight range 1.4057-1.4091, close 1.4107
USDCAD is trading quietly and in a relatively narrow band. Topside gains are hampered by rising crude prices, but they are more of a drag, rather than a brake. The more pressing issue is the increased hostility by the Trump administration.
US Trade Rep Jameson Greer tipped his hand about the American negotiation strategy for CUSMA. He sounded like he planned on bi-lateral deals rather than the existing CUSMA. “I would love to have by the end of the year at least some arrangements, one with Canada, one with Mexico.”
Trump added his two cents by slapping another 50% tax on a wide range of Canadian exports including cars.
WTI oil prices continued to climb, rising from 87.42 to 90.73 on fears that Trump plans a full-scale war. Secretary of State Rubio said that Iran doesn’t seem interested in a deal.
The US dollar is trading with a bid due to safe-haven demand after Trump said he wasn’t in a hurry to resume talks with Iran is “clearly not serious about making a deal.” Yemen’s Houthis forced two Saudi tankers to back off from trying to sail through the Bab-el-Mandeb Strait.
Canada Retail sales, ex-autos rose 1.2% m/m (forecast 1.4%) compared to the April increase of just 0.1%.
USDCAD Technical Outlook
The intraday USDCAD technicals are neutral, consolidating inside a range bound by 1.4000 and 1.4150 after pulling back from the mid-July high near 1.4250. A decisive break below 1.4000 targets 1.3960, while a break above 1.4150 puts 1.4250 ion play.
Longer term, USDCAD remains in an uptrend from the spring low near 1.3600, supported by prices holding above the 100-day and 200-day moving averages in the 1.3855-1.3870 area. The daily momentum indicators are neutral.
For today: USDCAD support is at 1.4060 and 1.4030. Resistance is at 1.4110 and 1.4140.
Today’s expected range is 1.4030-1.4120
FX Heat Map
FX open high low 6:00 am
Risk Aversion Percolates
Global risk aversion rose further overnight due to rising oil prices stoking inflation fears which is one of the reasons for lifting US Treasury yields. Rising interest rates combined with tech-sector drama weighed on equities and knocked gold down nearly 1.0%. Alphabet lost 1.24% overnight over capex plans and Tesla is down 1.3% after its Q2 earnings were 37% below estimates. Trumps new global tariff plan isn’t helping.
Choke Point Escalation
Trump must believe that American’s are the absolute dumbest people on the planet. If not, why would he say stuff like “Iran is getting hit so hard and that they want to make a deal,” or post a meme of himself which says, “Trump orders CENTCOM to ‘open the gates of hell?” Trump’s words defy the reality that Iran still has the Strait of Hormuz closed and their Houthi proxies have disrupted shipping in the Red Sea.
Trump just tweeted that he will hold Iran responsible for the Houthi actions.
The WSJ reports that the US is building up troops and equipment into Middle East bases which may be a prelude to a ground war. If so, it won’t do anything for his approval ratings which are already the lowest of any president in the modern era.
Taking Stock
Asia equity indexes defied the risk off gloom because of a rebound in the battered-semiconductor sector. Japan’s Topix closed with a 0.45% gain and Australia’s ASX 200 rose 0.34%. Hong Kong’s Hang Seng index lost 0.95%.
As of 5:35 am PT, European bourses are mixed. The French CAC-40 is down 1.13%, the German DAX has lost 0.67% and the UK FTSE 100 index is down .0.43%. S&P 500 futures are down 0.14%, the 10-year Treasury yield is 4.707%, the DXY is 101.39 and gold is 4,072.81.
EURUSD | Range 1.1381-1.1436
EURUSD climbed higher heading into the ECB meeting and then dropped after the ECB statement was released. The ECB left rates unchanged at 2.25%, as widely expected but the anticipated “hawkish hold” was nowhere to be found. Instead the ECB committed to a data-dependent, meeting-by-meeting approach. EURUSD is further weighed down by rising oil prices from escalating Middle East tensions.
GBPUSD | Range 1.3340-1.3394
Sterling added to its overnight losses after the ECB decision and is at its session low. iThe technical picture is bearish as prices are well-below the 100-day and 200-day moving averages at 1.3400. Sterling is suffering from higher oil prices, modest US dollar safe haven demand, cooling inflation and ongoing political drama due to fiscal uncertainty.
USDJPY | Range 163.00-163.63
USDJPY continues to consolidate its recent gains and is blew through its overnight top in NY trading. The currency pair is underpinned by higher crude prices and rising US Treasury yields. However, bullish enthusiasm is tempered by BoJ FX intervention risks.
AUDUSD | Range 0.6981-0.7022
The Australian dollar got an early lift on the heels of a strong employment report. Australia added 76,300 new jobs in June (forecast 15,000) while the May data was revised higher to 44,000. However, the rally was not sustained and AUDUSD is trading near its session low.
USDMXN | Range 17.3776-17.4870
USDMXN traded higher on the back of broad USD strength and risk-off sentiment. Mexican inflation (1st half of the month) is due later today with Core inflation expected at 0.16% vs 0.19% previously.
CHINA
- PBoC Fix: 6.7906 vs exp. 6.7712 (prev. 6.7933)
- Shanghai Shenzhen CSI 300 rose 0.23% to 4,728.00
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
