August 7, 2025

USDCAD open 1.3769, overnight range 1.3746-1.3780, close 1.3774

USDCAD dropped yesterday thanks to broad-based US dollar selling pressure stemming from a disappointing US ISM services report. The index dropped to 50.1 from 50.8 in June, while the Prices-Paid component rose to 69.9 from 67.5, indicating fewer jobs and higher prices—a possible effect of Trump’s tariffs.

Tariff day is tomorrow, and Canada’s exports to the US not covered by CUSMA will face a 35% tariff. Prime Minister Mark Carney announced a $1.2 billion bailout for the lumber industry but has said little else on the state of US/Canada trade talks.

WTI oil bounced from its lows and is trading in a $65.12-$66.34 range. The rally is due to hopes that Russia may offer some concessions to Trump to avoid further sanctions. However, Trump’s threat to sharply increase tariffs on countries importing Russian oil will limit gains.

There is not much in the way of actionable economic data on today’s agenda, but Fed policymakers are unmuzzled. Boston Fed President Susan Collins, Fed Governor Lisa Cook, and San Francisco Fed President Mary Daly will all offer opinions on the timing of the next Fed rate cut.

USDCAD Technical Outlook:

The intraday technicals have flipped to modestly bearish with the break below the July 23 uptrend line at 1.3780 which has now reverted to minor resistance. USDCAD is targeting support at 1.3740. 

Longer term, USDCAD needs the 100-day moving average resistance at 1.3847 to contain downside moves or risk a further drop to the 1.3660 area. The downtrend from March remains intact while prices are below 1.3900.

For today, USDCAD support is 1.3740 and 1.3710. Resistance is 1.3790 and 1.3820. Today’s Range: 1.3730-1.3810.

Caution Ahead of Tariff Day

A slew of Trump tariffs is expected to go into effect tomorrow although further extensions cannot be ruled out. Swiss President Karin Keller-Sutter was blindsided with Trump’s announcement of a 39% tariff on Switzerland exports to the US. She has flown to Washington, uninvited, in hopes of meeting Secretary of State Rubio and maybe even Trump.

India faces another tariff bump as a penalty for buying Russian crude. European pharmaceutical companies face what Trump called “a small tariff.” Then he said, “In one year, one and a half years maximum, it’s going to go to 150% and then it’s going to go to 250% because we want pharmaceuticals made in our country.” What would happen if the pharmaceutical companies get together and stop selling to the US?

Bloomberg reports that Russia is “considering” an offer to halt airstrikes on Ukraine to avoid further sanctions but will not end the war.

Taking Stock

Asian equity markets closed with gains across the board led by a 1.02% rise in Japan’s Topix. Australia’s ASX 200 gained 0.84% while Hong Kong’s Hang Seng closed flat.
European bourses opened in positive territory and are steady with the UK FTSE climbing 0.21% while the French CAC 40 is up 0.17% and the German DAX is flat. S&P 500 futures are up 0.15%, the US 10-year Treasury yield is 4.237% and the US dollar index (DXY) is 98.56. Gold (XAUUSD) is 3361.62 as of 5:30 a.m.

EURUSD

EURUSD is at the top of its 1.1528–1.1616 range with prices continuing to be supported by the latest bout of Fed easing speculation. The single currency received additional support from June retail sales which rose 0.3% m/m compared to a decline of 0.3% in May, which helped offset disappointment after German factory orders fell 1.0% m/m (forecast 1.0%).

GBPUSD

GBPUSD rallied from 1.3282 to 1.3331 with traders ignoring fears about government finances and how it will fill a £50 billion deficit. Traders ignored news that UK Construction PMI fell to 44.2 from 44.8. The Bank of England is expected to cut rates tomorrow.

USDJPY

USDJPY is trading quietly in a 147.31–147.89 range due to general US dollar weakness and the recent drop in US Treasury yields. Labor cash earnings rose 2.5% (forecast 3.2%, previous 1.0%) which helps to keep the door open for a BoJ rate hike.

AUDUSD

AUDUSD firmed in a 0.6466–0.6509 range with prices getting a boost from rising US Fed rate cut odds. Traders ignored AiG PMI data (actual -23.9, May -20.0) and Construction PMI (actual -1.3 vs. previous -14.9).

USDMXN

USDMXN consolidated yesterday’s losses in 18.7094–18.7466 range with prices weighed down by speculation that Mexico and US interest rate spreads will narrow. Banxico meets tomorrow and a 25-bps rate cut is expected.

USDCNY

PBoC fix: 7.1409 vs exp. 7.1797 (Prev. 7.1366)

The Shanghai Shenzhen CSI 300 rose 0.24% to 4113.46

FX ranges Open, High Low

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