July 30, 2025
USDCAD open: 1.4054, overnight range 1.4031-1.4068, close 1.4047
USDCAD is trading with a slightly dovish bias as the US dollar remains under pressure following yesterday’s FOMC decision and Fed Chair Warsh’s press conference. Traders aren’t focused on what Warsh said. They’re focused on what he didn’t say, namely anything that hinted at his interest rate outlook.
The BoC Summary of Deliberations that was released yesterday didn’t offer any new insight. At the time, Governing council noted that the possibility of new US tariffs was a downside risk. Last week, Trump turned that risk into a reality.
The mixed Fed reviews were just one issue. The other was the renewal of Middle East hostilities. The US attacked Iran and Iran attacked its neighbors.
Oil traders did not seem too fazed. WTI oil has dropped 1.16% from yesterday and is trading at 83.50 in NY.
The US inflation outlook will be front and center this morning when Core PCE Price index (forecast 0.2% m/m, previous 0.3%) is released.US Q2 GDP is expected unchanged at 2.1%q/q and weekly jobless claims are expected to have risen to 200,000 from187,000 last week.
USDCAD Technical Outlook
The intraday USDCAD technicals have turned soft, with price testing the bottom of its recent range and looking to probe the 1.4000 level after a sharp retreat from Tuesday’s high near 1.4120. Momentum has deteriorated, with the daily RSI slipping which suggests that downside pressure is building rather than fading.
Longer term, USDCAD remains within a broader 1.3860-1.4460 range that has capped and supported price since the February swing low, but the pair has now fallen back after failing to hold July’s advance toward 1.42. The 100-day and 200-day moving averages, at 1.3897 and 1.3856 respectively are the targets on a break below 1.3960.
For today, USDCAD support is at 1.4020 and 1.3990. Resistance is at 1.4070 and 1.4110.
Today’s expected range is 1.4000-1.4070
FX Heat Map
FX open high low 6:00 am
Greenback Slides on Fed
Traders do not know what to make of Fed Chair Kevin Warsh. They are questioning his commitment to fighting inflation and they took their frustration out on the US dollar, which fell in the wake of the FOMC decision.
The Fed left rates unchanged at 3.50-3.75% Wednesday, as expected, but three regional presidents, Logan, Hammack and Kashkari, dissented in favour of a 25bp hike. That should not have surprised anyone as their views were well known ahead of the meeting.
US GDP Advance for Q2, core PCE, jobless claims and personal spending all land at 8:30 am, alongside GDP prints from across the eurozone. The Bank of England announces its own rate decision today and is widely expected to hold.
Data Vindicates Warsh
Today’s data largely vindicated Warsh’s decision to leave interest rates unchanged. GDP growth slowed to 1.5%, suggesting the economy is cooling, while June’s inflation data showed further moderation (Core PCE Price index actual 0.1% m/m, forecast 0.2%, previous 0.3%) even as consumer spending remained resilient, supporting the Fed’s view that patience is warranted rather than another rate move.
Iran Still Defiant
Iran continues to behave in a manner that is contrary to every statement Trump makes about how his war is progressing. He repeatedly tells reporters that Iran is begging for a ceasefire, and that its military is decimated, yet the IRGC is still disrupting shipping in the Strait of Hormuz, and the Red Sea, while attacking its neighbors, with Egypt added to the list overnight.
Jordan said it intercepted five Iranian missiles with no casualties. Iran struck back at a building in northern Kuwait, killing one worker, while explosions were also reported near Riyadh. Crude, which had rallied hard on the prior day’s escalation, pulled back overnight before steadying as European trade got underway.
The US retaliated with another wave of strikes, but the news had little impact on oil prices.
Taking Stock
Asian markets closed with Japan’s Topix falling 0.54%, Hong Kong’s Hang Seng rising 0.20% and Australia’s ASX 200 dropping 0.78%.
As of 5:30 am PT European bourses are higher. The UK FTSE 100 index is up 0.42%, the German Dax has gained 0.19% and the French CAC-40 is up 0.99%. S&P 500 futures are up 0.63%, the 10-year Treasury yield is 4.677%, the DXY is 100.71 and gold is 4,071.84.
EURUSD | Range 1.1434-1.1475
The single currency is consolidating yesterday’s post-FOMC gains with traders and economists unsure if Mr. Warsh is hawkish or dovish. Meanwhile, the Eurozone economy keeps chugging along despite Trump and his tariffs and Trump’s war with Iran. Q2 GDP grew 0.4% while German GDP rose 0.9% y/y in Q2, compared to the forecast of a 0.6% gain. Economic Sentiment rose to 96.98 from 95.4 in July. Today’s direction will continue to be driven by the fall-out from the FOMC decision.
GBPUSD | Range 1.3333-1.3407
GBPUSD reached its peak level in the aftermath of the BoE decision to leave rates unchanged at 3.75% as expected although three policymakers wanted to raise rates. The BoE also expects inflation to rise and growth to grind to a halt.
USDJPY | Range 163.08-163.74
USDJPY traded lower and is at the overnight low in early NY due to what traders believe are sharply lower risks for a Fed rate hike in the near term even though the odds of a September hike have climbed to 65% today from 57% yesterday. Traders are also awaiting the BoJ’s monetary policy decision tomorrow where no change in rates is expected.
AUDUSD | Range 0.6946-0.6969
AUDUSD bounced on the heels of the Fed decision. Recent inflation data downgraded risks for a RBA rate hike and the “is Warsh hawkish or dovish” debate supported broad US dollar selling pressure.
USDMXN | Range 17.3924-17.4842
The Mexican peso extended its overnight gains in early NY trading although the latest escalation in the Middle East will act as a drag. The Mexican economy is expected to have grown by 1.3% q/q in Q2 and 1.5% y/y.
CHINA
- PBoC Fix: 6.7892 vs (prev. 6.7899)
- Shanghai Shenzhen CSI 300 fell 1.10% to 4,549.72
CSI 300 losses attributed to profit taking in the tech sector. The US talk about banning Chinese robotics was condemned by China. Officials said the U.S. move is an overreach of “national security” and an act of protectionism that will harm American companies and consumers.
Beijing vowed to take “all necessary measures” signaling potential countermeasures against U.S. economic and trade actions.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
