USDCAD open: 1.3867, overnight range 1.3834-1.3874, close 1.3842
USDCAD is trading with a modest bid due to a mix of softer crude prices and concerns about the impact of Trump’s trade war on Canada.
Trump is reportedly planning additional trade penalties because Prime Minister Carney matched his latest round of 50% tariffs, dollar for dollar. Trump is feeling pretty smug but Canada is not defenseless. In 2025 it supplied about 63% of U.S. crude oil imports, close to 100% of imported natural gas, and roughly 81% of imported electricity, while also providing around 85–90% of U.S. potash (fertilizer) imports.
WTI oil dropped to $79.65 from 84.64 yesterday for a loss of 6.0%, due to increased hopes for the Strait of Hormuz to be reopened. Prices have rebounded to $80.35 in NY.
USDCAD Technicals
The intraday USDCAD technicals remain slightly bullish above 1.3840 and are looking for a break above 1.3880 to target the 1.3900-20 zone.
Longer term, the USDCAD downtrend from July 7, remains intact while prices are below 1.3970, a level guarded by resistance in the 1.3900-10 zone. The daily RSI has recovered from deeply oversold levels to neutral.
For today, USDCAD support is at 1.3840 and 1.3820. Resistance is at 1.3880 and 1.3910.
Today’s expected range is 1.3840-1.3910.
FX Heat Map
FX open high low 6:00 am
Oil Slides on Oman and Iran Plan
Oman and Iran appear to have reached an arrangement that could lead to the reopening of the Strait of Hormuz. However, Iran’s Deputy Foreign Minister insists that the opening hinges on the US agreeing to its demands. Washington insists large volumes of oil are still slipping through Hormuz, yet AIS data shows transits running at barely 5-10% of pre-war levels and war risk premiums at 50 times normal. Someone is not telling the truth.
Ho-hum Inflation Numbers
The Powell Fed’s favorite inflation metric is on tap, but current Fed Chair Kevin Warsh is not a fan. Anyway Core PCE rose 0.2% m/m, as expected but up from 0.1% in June. The annual rate is stuck at 3.3%. Q2 GDP is unchanged at 1.5% but durable goods orders surged 1.1% (forecast 0.7%, previous 0.5%.)
Today’s data is overshadowed by anticipation of Fed Chair Kevin Warsh’s speech at Jackson Hole. The anticipation may be misguided as Mr. Warsh said he is not a fan of forward guidance.
Taking Stock
Asian markets closed mixed to higher with Hong Kong’s Hang Seng gaining 0.56% and Japan’s Topix rising 0.42%. Australia’s ASX 200 fell 0.40%.
As of 5:35 am PT, the German DAX is up 0.48%, the French CAC-40 has climbed 0.70% and the UK FTSE 100 is flat as are S&P 500 futures. The US 10-year yield is 4.649%, the DXY is 98.96 and gold is $4,622.75.
EURUSD | Range 1.1660-1.1678
EURUSD consolidated near recent three-month highs in a quiet overnight session. The single currency found support from a broadly softer US dollar after weak US data (consumer confidence fell to 89.4 and new home sales plunged 10.5%) and from sliding oil prices following reports that Pakistan’s army chief delivered a de-escalation proposal to Tehran. Firm ECB rate hike expectations, underpinned by Monday’s strong Ifo results, remain intact.
GBPUSD | Range 1.3613-1.3655
GBPUSD drifted with a modestly softer bias overnight despite the improved risk tone. Sterling continues to draw support from ongoing expectations for a BoE rate hike by year end.
USDJPY | Range 158.88-159.26
USDJPY retreated from its Asian session peak on lower oil prices, but the downside was limited due to steady 10-year US Treasury yields that were sticky around 4.64%. Intervention concerns on price action above 160.00 continue to deter topside ambitions.
AUDUSD | Range 0.7160-0.7189
AUDUSD rallied after July inflation data surprised to the upside. Headline CPI rose 3.5% y/y (forecast 3.2%, previous 3.8%) while the trimmed mean gained 0.5% m/m (forecast 0.3%), leaving the annual core rate stuck at 3.6%. The results add further support for another RBA rate hike at the September meeting, a view reinforced by Tuesday’s hawkish RBA minutes. Falling oil prices and firmer risk sentiment added to the bid.
USDMXN | Range 16.9227-16.9536
USDMXN eased alongside broad-based US dollar weakness as soft American data and tumbling oil prices sapped greenback demand. The peso also benefited from the improved risk appetite stemming from Iran de-escalation headlines. Yesterday’s mixed GDP and benign inflation data continue to support Banxico’s decision to pause its rate cutting cycle.
CHINA
- PBoC Fix: Â 6.7829 vs exp. 6.7166 (prev. 6.7852)
- Shanghai Shenzhen CSI 300 rose 0.85%% to 4,590.79
The U.S. is considering a 7.5% tariff on Chinese goods over “overcapacity” concerns, ahead of a potential Xi-Trump meeting.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
