July 18, 2025
USDCAD open 1.3727, overnight range 1.3724-1.3757, close 1.3754
USDCAD is drifting lower due to improved global risk sentiment, although the losses may be short-lived. That’s because the rationale behind this week’s US dollar gains has not changed. The Fed is not cutting rates any time soon despite what Trump and Governor Christopher Waller say. Furthermore, the greenback is underpinned by resilient US economic data and increased speculation that Trump’s trade war will be resolved.
USDCAD gains may be hampered as the Bank of Canada is expected to leave its benchmark rate unchanged on July 30.
WTI oil traded in a 67.43–68.57 range. Standard and Chartered Bank economists suggest markets overestimate Opec’s spare capacity, which could mean prices have $15/barrel upside.
There are a reported $1.1 billion of USDCAD 1.3725-30 option strikes maturity at 10:00 am
Today US Building Permits rose 0.2% m/m (previous 02.0%) while Housing Starts rose 4.6% m/m (previous -9.7%). Michigan Consumer Sentiment is release later today. There is no Canadian data.
USDCAD Technical Outlook:
The intraday technicals are moderately bearish while trading below 1.3750 and are looking for a move below 1.3705 to target 1.3690. A break above 1.3750 shifts the focus to 1.3790.
Longer term, USDCAD is rangebound in a 1.3560-1.3820 band with a bullish short-term ascending channel between 1.3690 and 1.3790.
For today, USDCAD support is 1.3690 and 1.3650. Resistance is 1.3760 and 1.3790. Today’s Range 1.3660-1.3760.
The Audition
Federal Reserve Governor Christopher Waller wants to be Fed Chair and is demonstrating to Trump that he would be an obedient lackey, and he is not being very subtle. His speech at the Money Marketeers of New York University was titled “The Case for Cutting Now.” His reasons are:
“First, tariffs are one-off increases in the price level and do not cause inflation beyond a temporary surge.”
Second, a host of data argues that monetary policy should be close to neutral, not restrictive.”
Third, “while the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased.”
He ended his speech with “Mr. President, I promise to cut rates faster than you cut ties with America’s allies” (not really, but he was probably thinking it.)
His colleagues do not agree. NY Fed President John Williams, San Francisco Fed President Mary Daly, and Governor Adriana Kugler made comments supporting unchanged monetary policy.
Taking Stock
Improved risk sentiment following Wall Street’s upbeat close powered Asian equity indices higher. Australia’s ASX 200 soared 1.37% on higher iron ore prices and positive sentiment after PM Albanese’s visit to China. Japan’s Topix fell 0.19% due to uncertainty around this weekend’s Upper House election. Hong Kong’s Hang Seng rose 1.33%.
European bourses are firmer on improved risk sentiment led by a 0.61% gain in the French CAC 40. The German DAX is up 0.41% while the UK FTSE 100 gained 0.28%. S&P 500 futures are up 0.11% as of 6:20 am EDT. Gold (XAUUSD) gained 13.18 to 3349.95 while the 10-year Treasury yield is steady at 4.45%. The US dollar index (DXY) is 98.37 compared to the close of 98.70.
EURUSD
EURUSD nudged higher overnight, rising from 1.1593 to 1.1646. Prices should struggle to make headway above 1.1660 today as the “fire Powell” drama dissipates and after yesterday’s US data did not support rate cuts. Retail Sales were higher than expected and jobless claims rose less than anticipated.
GBPUSD
GBPUSD is at the top of its 1.3405–1.3444 overnight range due to the broad-based but modest US dollar weakness. Prices are seeing a little support after analysts at Goldman Sachs predicted that the BoE will slow its pace of rate cuts after they cut rates by 25 bps on August 7.
USDJPY
USDJPY traded quietly in a 148.29–148.89 range despite Core-CPI rising to 3.4% y/y from 3.3%. Traders were cautious ahead of Japan’s Upper House election on Saturday. The coalition government led by fiscal hawk Prime Minister Shigeru Ishiba is in danger of losing its majority, and opposition candidates are opposed to austerity measures. If so, USDJPY could hit 150.00.
AUDUSD
AUDUSD traded with a bullish bias and is at the top of its 0.6482–0.6523 range. Prices are underpinned by improved global risk sentiment, dovish comments by Fed officials (other than Waller), and higher iron ore prices. NZDUSD tracked AUDUSD moves and traded in a 0.5929–0.5973 band.
USDMXN
USDMXN dropped from 18.7789 to 18.7173 after Trump’s denial that he planned to fire Powell and comments by Fed officials suggesting unchanged monetary policy soothed risk-averse markets.
USDCNY
PBoC fix: 7.1498 vs exp. 7.1736 (Prev. 7.1461).
Shanghai Shenzhen 300 rose 0.60% to 4058.55
US Commerce department increases tariff on Chinese imports of graphite to a total of 160% which equates to equates to $7 per kilowatt-hour added cost to an average EV battery cell. Your new electric car just got more expensive.
FX High, Low, Open
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau
