July 17, 2025

USDCAD open 1.3750 overnight range 1.3684-1.3769, close 1.3682

USDCAD had a wild ride yesterday, dropping from 1.3750 to 1.3680, due to Trump deflecting negative publicity about his handling of the Epstein files by suggesting that he would fire Fed Chair Jerome Powell.  He quickly reversed course after financial markets threatened to melt down and denied firing the Fed Chair was in the cards. Nevertheless, where there is smoke there is fire, and the US 10-year yield is close to the top of its recent range which is underpinning USDCAD

Prime Minister Mark Carney is managing expectations on the trade file.  He warned that whatever deal is signed, it will include tariffs. He also suggested that a new deal would include lower export quotas for softwood lumber and promised to curb steel imports.

WTI oil prices traded narrowly in a 660.30-66.90 band and got a bit of support from yesterday’s EIA data showing US crude inventors fell by 3.85 million. Prices are also supported by lasts weeks International Energy Agency report suggesting that increased production was not leading to higher inventories.

USDCAD Technical Outlook:

The intraday technicals are bullish while prices are above 1.3710 looking for a sustained break of resistance at 1.3750 to extend gains to 1.3850. A move below 1.3710 suggests a retest of support at 1.3640.

Longer term, the decisive break above resistance in the 1.3680-90 zone snapped the downtrend line from May 13 at 1.3680 which should revert to support. However, the rally is just a correction if prices cannot breach resistance at 1.3850.

For today, USDCAD support is 1.3720 and 1.3680.  Resistance is 1.3790 and 1.3820.  Today’s Range 1.3730-1.3820

Data Downgrades Rate Cut Hopes

US Retail Sales rose 0.6%, easily beating the 0.1% forecast and last months 0.9% decline. The Philadelphia Fed Manufacturing Survey jumped to 15.9 from -4 previously, while weekly jobless claims dropped 7,000 to 221,00. Today’s results will put a damper on September rate cut hopes.

Taking Stock
Asian equities traded higher after the Powell firing story was denied. Australia’s ASX 200 rose 0.90% while Japan’s Topix gained 0.72%. Hong Kong’s Hang Seng closed flat.

European bourses are in the green with the German Dax gaining 0.92% and the French CAC 40 up 0.90% and 1.01% respectively. The UK FTSE 100 index has risen by 0.30% while S&P 500 futures drift around flat ahead of earnings reports from Netflix (NFLX) at the end of the day.

The US 10-year Treasury yield is trading at 4.46% and gold (XAUUSD) is 3311.69 as of 6:55 am PDT.

EURUSD
EURUSD traded negatively and dropped from 1.1643 to 1.1574 before rebounding to 1.1589 in NY. Firmer US Treasury yields, EU/US trade talks, and a dash of French political drama are weighing on prices which have been in a downtrend since the beginning of the month. Eurozone June inflation rose 2.0% y/y as expected while core-CPI matched forecasts and rose 2.3% y/y. Germany said “nein” to the EU’s proposed €2 trillion budget.

GBPUSD
GBPUSD traded in a 1.3375-1.3432 range overnight and is in the middle of that band in NY. The UK employment data showed the number of employed persons falling while the unemployment rate ticked up to 4.7% in the 3 months ending in May, compared to expectations and the previous level of 4.6%. ING analysts suggest that today’s results take some pressure off the Bank of England to ease rates quickly.

USDJPY
USDJPY dropped to 146.94 yesterday on safe-haven demand for yen in the wake of the “Powell firing” story yesterday but rebounded to 147.88 by the close. The rally continued overnight and USDJPY is near the top of its 147.73-148.83 ranges, supported by higher US Treasury yields.

AUDUSD
AUDUSD traded poorly, falling from 0.6534 to 0.6462 where it sits in early NY trading. Australia lost 38,200 jobs and the unemployment rate rose to 4.2% (forecast 4.1%). The results forced traders and analysts to increase the odds for a RBA rate cut in August.

NZDUSD
NZDUSD traded in a 0.5910-0.5953 range due to broad US dollar strength and bearish short-term technicals.

USDMXN
USDMXN has had a topsy-turvy 24 hours, dropping and rising in a 18.6751-18.8489 range and sitting at 18.8141 in NY. The price action was dictated by yesterday’s Powell news. President Claudia Sheinbaum and Canada’s Mark Carney are discussing ways to strengthen trade collaboration to help counter Trump’s US-first agenda.

USDCNY
PBoC fix: 7.1461 vs exp. 7.1703 (Prev. 7.1526).
Shanghai Shenzhen 300 rose 0.66% to 4034.49
Trump’s trade war with China has helped Beijing improve relations with Australia. Australia’s Prime Minister concluded a six-day visit with a slew of new trade and investment deals.

FX High, Low, Open

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance