October 8, 2026

USDCAD open (6:00 am): 1.4264, overnight range 1.4244-1.4278, close 1.4259

USDCAD is  trading sideways and is underpinned by a rise in global risk aversion stemming from Trump’s latest threats to attack Iran. In addition, there is a renewed focus on the hawkish Fed outlook after the release of the FOMC minutes yesterday. The minutes suggest a high likelihood of a 25bp Fed rate hike in December while most Canadian bank economists believe the BoC will leave its benchmark rate unchanged.

WTI traded with a bid, rising from $88.78 to $92.82 in early NY trading after reports that the US military has been ordered to be ready for possible strikes on Iran even before the mid-terms.

 The Canada and US trade talks aren’t going anywhere and Trump weighed in.  He said that Canada has been very difficult to deal with and would like a deal but he is not satisfied.

US weekly jobless claims rose 197,000 last week, the same as the week before and supporting the narrative that America does not have a labour problem.

 August wholesale inventories are expected to be unchanged at 0.7%

No Canadian economic reports are on tap today.  

USDCAD Technical Outlook

The intraday USDCAD bias is bullish while trading above 1.4240 and still looking to break above resistance in the 1.4300 area to extend gains to 1.4350. Momentum indicators are overbought and suggest that until the situation is resolved, addition gains will be a struggle.

Longer term, USDCAD has spent the week consolidating in a 1.4195-1.4294 range. The daily RSI is working off the overbought extreme while prices have barely given ground. The double top at 1.4294 remains intact but is losing credibility after the follow-through selling failed to materialize. A decisive break above 1.4300 would put the daily upper Bollinger Band at 1.4335 in play. A break below 1.4195 targets 1.4110.

For today, support is 1.4240 and 1.4210. Resistance is 1.4295 and 1.4335.

Today’s Range 1.4220-1.4290

FX Heat Map

FX open high low 6:00 am

Fed Minutes Lean Hawkish and Waller

The US dollar started the NY session with a bit of a bid after the minutes of the September 15-16 meeting showed unanimous support for the 25-basis-point hike. More importantly, they indicated that another increase would likely be appropriate by year-end.

CME interest rate futures traders mostly agree, and 70% expect a 25 bp hike to 4.25% in December, with little to no chance of an October increase.

This morning, Governor Christopher Waller, in prepared remarks to an audience in Istanbul, called core PCE at 3% year over year too high and said he anticipates additional hikes. He noted that 16 of 18 dots called for at least one more hike this year.

President Trump, meanwhile, called Chair Warsh great, while stressing he is just one vote and that rates should come down, a wish the dot plot does not appear to share.

Trump Weighs an Iran Encore

Earlier this week, the US scrambled to redeploy about a dozen B-1B Lancer bombers from an RAF base in the UK back to their home bases in America because of a perceived threat from Iran. Trump is annoyed and ordered the Pentagon to prepare strike options on Iran that could be used before next month’s midterms.

US and Iran mediation efforts have stalled, a tanker was struck by projectiles off Qatar with casualties reported, and Saudi-led forces and the Houthis continue to trade strikes. Brent and WTI oil prices rose, which has helped keep the dollar bid.

Taking Stock

Asia equity indexes closed lower. The Australian ASX 200 fell 0.77%, Japan’s Topix lost 1.51%, and Hong Kong’s Hang Seng fell 1.43%.

As of 5:40 am PT, European equity indexes are down, but not as much as they were earlier. The German DAX has lost 0.86%, the French CAC-40 has dropped 0.45% and the UK FTSE 100 is flat. S&P 500 futures are down 0.38%%, the 10-year Treasury yield is 5.325%, the DXY is 102.28 and gold is $4,122.54.

EURUSD | Range 1.1172-1.1213

EURUSD is consolidating yesterday’s losses, with the widening gap between OATs and Bunds and firmer crude prices weighing on the currency. German trade data for August showed a surplus of €19.5 billion (forecast €19 billion and €21.6 billion in July).

GBPUSD | Range 1.3184-1.3223

Sterling traded defensively due to souring risk sentiment from rising oil and fresh reports that Trump will resume attacks on Iran. The hawkish FOMC minutes, although expected, didn’t help sentiment. UK RICS house prices fell 32%, which was a tad worse than the forecast of -30%. The odds that the Bank of England hikes rates by 25 bp in November are around 81%.

USDJPY | Range 157.58-158.31

USDJPY bottomed out in Asia and then climbed steadily into the NY open because of the renewed focus on a hawkish Fed and rising oil prices. Some analysts believe that the Bank of Japan will raise rates in December, which is helping to slow USDJPY gains.

AUDUSD | Range 0.6933-0.6969

AUDUSD is trading with a negative bias due to renewed global risk aversion sparked by Trump’s latest threats about attacking Iran. Today’s Australian consumer inflation expectations rose to 5.3% from 4.9%, which should renew calls for another RBA rate hike. However, some analysts believe that if a rate hike happens, weak consumer sentiment and spending suggest it won’t happen this year.

USDMXN | Range 17.9504-18.0686

USDMXN is consolidating its October losses in a choppy manner. Mexican core CPI rose 0.2% in September which was lower  than the 0.24%  expected but higher than the  0.16% in August. Later today, the minutes from the September 24 Banxico policy meeting will be released.

China

Welcome back China

PBoC Fix: 6.7367 vs exp. 6.7254 (prev. 6.7351)

Shanghai Shenzhen CSI 300 fell 1.09% to 4,310.28, (last 4,357.62 on September 30)

China’s foreign exchange reserves fell to $3.4003 trillion a decrease of $38.1 billion (1.11%) from August.  The PBOC continued its gold buying spree, increasing official holdings to 77.47 million ounces, marking the 23rd consecutive month of accumulation.

Bloomberg reported that the EU is preparing to restrict Chinese hybrid vehicle imports

Chart: Offshore yuan USDCNH

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview