August 14, 2025

USDCAD open 1.3776, overnight range 1.3745-1.3802, close 1.3760

USDCAD continues to bounce around in a 1.3740-1.3800 range due to uncertainty around future US/Canada tariffs and its impact on the economy alongside calls for more aggressive and deeper US interest rate cuts. USDCAD spiked to 1.3802 after the hotter than expected PPI data and the tame jobless claims report but quickly retreated from the peak as there are plenty more economic inputs on the table before the September 17 Fed meeting.

The BoC minutes from the July 30 monetary policy meeting did not provide any new insight. The Governing Council concluded that with uncertainty unusually high, monetary policy decisions must be made over a shorter horizon than usual. The statement reinforced that if the economy weakens further and trade-related price pressures stay contained, a rate cut could be warranted.

WTI oil traded sideways in a 62.70-63.10 range due to waning summer demand and hopes that sanctions on Russian crude may be eased following the Trump/Putin meeting Friday.

The Canadian economic calendars is empty.

USDCAD Technical Outlook:

The intraday technicals are unchanged from yesterday.  They are bearish while trading below 1.3790 after failing to break above resistance at 1.3870 and looking for a move through support at 1.3730 to target 1.3680.

USDCAD has churned within a 1.3700-1.3820 range for two weeks and after failing to extend gains. The medium-term bias is bearish with a breach of 1.3700 targeting 1.3620.

For today, USDCAD support is 1.3730 and 1.3700. Resistance is 1.3810 and 1.3840. Today’s Range: 1.3740-1.3820

Managing Expectations

President Trump is doing his part to dampen expectations around his Friday meeting with Putin. He said he hoped this meeting would let him set up a “quick second meeting” with Ukraine President Zelenskyy. At the same time, he said he would impose “severe consequences” if Putin did not agree to a ceasefire.

Treasury Secretary Scott Bessent, in an interview on Bloomberg, said that “the Europeans need to join us in higher tariffs on China and other nations that buy Russian oil.” Traders generally ignored all of the above and shifted their focus to upcoming data.

Data Supports Powell’s View

US PPI ex-food and energy was hotter than expected surging 3.7% compared to the forecast 2.9% y/y, and 2.6% y/yin July. Weekly jobless claims fell by 3,000 from the upwardly revised 227,000 last week. Today’s data suggests that prices are rising and the labour market is steady.

Taking Stock

Asian equity markets closed on a mixed note. Japan’s Topix slid 1.10% after the US Treasury Secretary said Japan was behind the curve in fighting inflation, sparking BoJ rate hike fears. Hong Kong’s Hang Seng fell 0.37% while Australia’s ASX 200 rose 0.53%.

European bourses are in the green. The French CAC-40 index is up 0.42%, followed by the German DAX with a 0.39% gain while the UK FTSE 100 are flat. S&P 500 futures dropped after the PPI data and are down 0.46%. The 10-year Treasury yield rose from 4.207% to 4.23%. Gold (XAUUSD) is 3354.17, and the US dollar index (DXY) is firmer, rising to 97.98 as of 5:45 am PDT.

EURUSD

EURUSD traded in a 1.1668-1.1715 range and is sitting at 1.1685 in early NY. Traders are keeping an eye on Trump/Putin summit news but are more focused on the US interest rate debate. Treasury Secretary Bessent called for a 50 bp rate cut in September but this morning, San Francisco Fed President (and non-voting FOMC member) said a 50 bp cut was not warranted. Eurozone Q2 GDP came in at 1.4% as expected while industrial production rose just 0.2% compared to the forecast for a 1.7% increase. EURUSD intraday technicals are bullish above 1.1620.

GBPUSD

GBPUSD extended yesterday’s gain in a 1.3563-1.3592 range with prices getting a boost from better-than-expected UK data. Q2 GDP rose 0.3% q/q and 1.2% y/y, topping expectations for 0.1% q/q and 1.0% y/y. Monthly GDP rose 0.4% (forecast 0.1%). ING analysts wrote that the gains were due to “components not intrinsically linked to underlying economic performance,” and they expect BoE policymakers to downplay the data. Industrial production and manufacturing production were also higher than anticipated. GBPUSD technicals are bullish above 1.3450.

USDJPY

USDJPY traded lower in a 146.22-147.42 range and is trading at 146.60 in NY. The currency pair suffered a one-two punch from falling US Treasury yields and US Treasury Secretary Bessent claiming that the Bank of Japan is “behind the curve” and should be hiking rates.

AUDUSD

AUDUSD chopped about in a 0.6525-0.6569 range and is at the bottom of the band in NY after gains from the robust Australian employment report faded. The unemployment rate ticked down to 4.2% from 4.3% while the country gained 24,500 new jobs.

USDMXN

USDMXN recouped yesterday’s losses, rising from 18.6260 to 18.6811 overnight. The gains were due to profit-taking after the peso’s appreciation since the beginning of the month and the US dollar index clawing back some losses.

USDCNY

PBoC fix: 7.1337 vs exp. 7.1743 (Prev. 7.1350). The Shanghai Shenzhen CSI 300 fell 0.08% to 4173.31. China and India have started discussions about reopening border trade, which has been halted for five years.

FX High, Low, Open

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