USDCAD open: 1.3942, overnight range 1.3933-1.3964. close 1.3942
USDCAD is consolidating Friday’s losses after blasting below major support in the 1.3960-1.3990 zone. The sell-off was triggered an upside surprise to Canada’s Labour Force Survey and a negative surprise form the US jobs data.
That combination led to a narrowing of 2 and 10-year CAD/US interest rate spreads. Stop-loss USDCAD selling occurred with the break below key support in the 1.3980-1.4000 level.
The CUSMA negotiations are facing an August 19 deadline for 50% US tariffs on a range of Canadian goods. Who will cave first? Many Americans are already experiencing an affordability crisis and another tariff tax will just make it worse and they could take their frustrations out on the Republican party in the mid-term elections. Meanwhile Mark Carney doesn’t have a strong hand and America has the stronger, more diverse economy.
WTI oil traded trickled higher in NY rising to 79.76/b after trading in a 77.80 79.59 range overnight. Oil supply disruptions from Russia and Ukraine and Strait of Hormuz are underpinning prices.
There is no notable US or Canadian economic data today.
USDCAD Technicals
The intraday USDCAD technicals are bearish below 1.3970 and looking for a break below 1.3920 to extend losses toward 1.3860. A move above 1.3970 targets 1.4020.
Longer term, a break below the 100-day moving average at 1.3916 opens the door to a drop to the 200day moving average at 1.3857. USDCAD selling is approaching oversold levels,
For today, USDCAD support is at 1.3910 and 1.3870. Resistance is at 1.3970 and 1.4000.
Today’s expected range is 1.3910-1.3970.
FX Heat Map
FX open high low 6:00 am
Monday Morning Blah’s
The US dollar dropped sharply Friday following news that US payrolls unexpectedly fell by 23,000 in July. The downward revisions to the May and June data lowered the risk for a September rate hike. Sunday, Fed Vice Chair for Supervision Michelle Bowman’s comments added to the bearish sentiment when she said that current monetary policy was “well positioned to get inflation down to the 2% target.” Markets are looking ahead to Wednesday’s US CPI data.
Trump’s Three-week War enters its 23rd Week
Iran and the US are still at it. Trump’s strategy (for today) is to just semi-negotiate with Iran and let rising inflation and a collapsing economy from the US blockade do the work for the US military. Iran says they are close to a deal with Oman to open the Strait but that won’t happen until the US agrees to reparations and ends the blockade and threats. Oil prices ticked up on the news.
Taking Stock
Asian markets closed higher except for Australia’s ASX 200 which lost 0.33%. Japan’s Topix rose 0.63% and Hong Kong’s Hang Seng climbed 1.05%.
As of 7:20 am, European bourses are mixed. The German Dax has risen 0.33% while the UK FTSE 100 has lost 0.27%. The French CAC 40 and S&P 500 futures are flat. The US 10-year Treasury yiled is 4.662%, the DXY is 99.72 and gold is 4,334.88.
EURUSD | Range 1.1548-1.1568
EURUSD is consolidating Friday’s gains with a bullish bias while prices are above 1.1520. There is not much in the way of economic drivers to provide direction, and August is traditionally a big European holiday month. US data and Middle East drama will dictate moves this week.
GBPUSD | Range 1.3483-1.3507
GBPUSD remained firm as the broader dollar selloff continued and continues to derive a benefit from the slightly hawkish BoE meeting which reduced the risk of a near term rate cut. UK traders are also awaiting Thursday’s data dump which includes Q2 GDP.
USDJPY | Range 157.58-158.79
USDJPY recovered most of Friday’s NFP-driven decline due to higher oil prices and the wide Treasury/JGB yield spread in favour of the US dollar. Traders are emboldened by their belief that FX intervention isn’t anything to worry about until prices are above 162.00.
AUDUSD | Range 0.7057-0.7075
AUDUSD is consolidating Friday’s post-NFP gains ahead of tomorrow’s RBA monetary policy meeting. The RBA is expected to leave rates unchanged.
USDMXN | Range 17.1235-17.1707
USDMXN retreated sharply on the heels of the lowered risk of a Fed rate hike in September, which followed Banxico’s decision to leave rates unchanged on August 6. Prices are testing February’s low and have not been below that level since June 2024.
CHINA
- PBoC Fix: 6.7884 vs exp. 6.7379 (prev. 6.7904)
- Shanghai Shenzhen CSI 300 rose 0.16% to 4,702.02
China July CPI (actual 0.5%, forecast 0.8%, previous 1.0%), July PPI (actual 3.5%, forecast 3.8%, previous 4.1%).
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
