USDCAD open: 1.3809 overnight range 1.3790-1.3848, close 1.3843
USDCAD saw a bit of selling pressure following soft US ADP data and a modestly hawkish BoC statement yesterday. The Bank left rates unchanged at 2.25% but hinted that a rate hike was not out of the question. The Bod C statement dropped the the reference that the policy rate remains “appropriate,” and warned that upside inflation risks have increased.
WTI oil traded higher in a $89.60-$93.13 range but prices eased to $91.95 in early NY trading. Analysts expect that Trump’s war with Iran and the subsequent disruption in curde supplies will keep prices elevated long into 2027.
Canada’s trade surplus narrowed to $0.77 billion from $4.28 billion in June.
USDCAD Technicals
The USDCAD technicals have flipped to bearish while trading below 1.3850 and are looking for a decisive break below 1.3800-1.3770 to extend losses to the 1.3740-1.3640 zone.
Longer term, the move below the 50% Fibonacci level of the January-July range at 1.3870 is targeting the 61.8% level at 1.3780. However momentum indicators on the 4 hour chart suggest USDCAD is extremely oversold although the daily chart RSI gives lost of downside room
For today, USDCAD support is at 1.3790 and 1.3760. Resistance is at 1.3850 and 1.3890
FX Heat Map
FX open high low 6:00 am
Intervention Fall-Out
The Bank of Japan intervened in the FX market and sold USDJPY yesterday. BoJ officials have not owned up to the action, but the odds of USDJPY dropping from 160.40 yesterday to 156.28 in NY today without official help are slim to none. The result is that the US dollar opened in NY with losses across the board. The move may be exaggerated as summer markets reign until summer’s last hurrah on Labour Day.
U.S. Data
US weekly jobless claims proved to be a non-event, rising 2,000 from last week’s upwardly revised 204,000 result and were little changed from last week’s 205,000. The US trade deficit widened to $119.6b from -118.88b in June.
What excited markets today were comments from Fed Governor Christopher Waller this morning about inflation, “saying my take is that underlying inflation is doing better than the core numbers suggest.”
US ISM Services PMI data is on tap as well as the US trade data.
Taking Stock
Asian equity markets closed mixed. Japan’s Topix rose 0.50% to 40,102.04, Australia’s ASX climbed 0.46% to 9,020.09 and the Hang Seng dropped 0.39% to 25,213.31.
As of 5:40 am PT, European bourses are mixed. The French CAC 40 is down 0.37%, the German Dax is flat, and the UK FTSE 100 has gained 0.59%. S&P 500 futures are up 0.27%, the 10-year Treasury yield is 4.753%, the DXY is 99.01 and Gold is $4,468.31.
EURUSD | Range 1.1584-1.1625
EURUSD rebounded yesterday following soft US ADP employment data which soothed fears for a September Fed rate hike. EURUSD was also underpinned by higher-than-expected Composite PMI which rose to 51.8 in August from 51 in July. Even so, traders are patiently awaiting Friday’s US nonfarm payrolls data.
GBPUSD | Range 1.3480-1.3512
GBPUSD continued to trade with a negative bias with the downtrend that started August 25 intact while prices are below 1.3520. Trading was muted due to a lack of actionable UK data and ahead of tomorrow’s US jobs numbers. Ongoing US and Iran hostilities are not helping motivation.
USDJPY | Range 155.52-158.97
Did they, or didn’t they? Only the BoJ knows for sure. Central bank officials do not have to admit intervening to bolster the yen for the rest of the FX world to be convinced that they did. BoJ Board member Hajime Takata gave the yen an additional boost when he hinted that rates could rise by 50 bps on September 18, rather than the 25-bps expected.
AUDUSD | Range 0.7159-0.7204
AUDUSD nearly recovered all of yesterday’s losses because of widespread US dollar selling pressures and better than expected trade data. Australia’s July trade surplus was $1.923 billion (forecast $1.39 b) while June’s surplus was revised higher.
USDMXN | Range 16.9528-17.0292
USDMXN has been choppy since last Friday and is essentially little changed from the level where it closed out August. Mexian consumer confidence ticked up to 46.6 in august from 45.1 in June.The currency continues to track broad US dollar sentiment, but the downside is hampered by unsettled US and Mexico trade talks.
CHINA
- PBoC Fix: 6.7829 vs exp. 6.7238 (prev. 6.7809)
- Shanghai Shenzhen CSI 300 rose 0.10% to 4,552.58
USDCNY has dropped to a 3.5-year low against the U.S. dollar, driven by a combination of broad dollar weakness, a significantly stronger central bank fixing, and supportive global currency movements.
RatingDog General Services Business Activity Index rose from July’s 50.4 to 51.4, indicating a faster albeit still modest rate of growth. Combined with Monday’s RatingDog Manufacturing PMI (actual 51.5) it suggests small to medium sized companies are performing pretty well.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
