August 19, 2025

USDCAD open 1.3820, overnight range 1.3797-1.3833, close 1.3803

USDCAD traded choppily but with a bid because of broad-based US dollar demand against the majors. The Trump/European leaders meeting to end the Russia/Ukraine war was seen as an opportunity by Russian forces, which launched their largest drone and missile attack, hitting 16 locations in Ukraine. Nothing has changed—the Europeans want peace, Trump wants the Nobel Prize, and Putin wants most of Ukraine.

There are a lot of Canadian inflation reports to digest. Headline CPI rose 1.7% y/y as expected and below the 1.9% seen last month The bulk of the drop was because of falling oil prices. Core-CPI rose 2.6 % y/y vs 2.7% in June while the monthly number rose 0.1%, the same as in June. The BoC’s favoured measures CPI-median rose to 3.1% from 3.0% while CPI-trim was unchanged at 3.0%.   There is another CPI report ahead of the next boC meeting so this one is nothing to get excited about.

WTI oil prices traded in a 61.88-62.67 band, with prices weighed down by fears of oversupply if a Russia/Ukraine ceasefire leads to the easing of Russian oil export sanctions. Prices reached the top on news that oil flow to Hungary and Slovakia was halted due to Ukrainian attacks. The WTI trend is lower while prices are below 62.70.

US Building Permits fell 2.8% in July but Housing starts rose 5.2% (previous 4.6%). Fed Governor and dove Michele Bowman speaks this afternoon.

USDCAD Technical Outlook:

The intraday technicals are mildly bullish above 1.3780 and are looking for a decisive break above the 1.3830 to test resistance in the 1.3865-70 zone and then 1.3890.) A break below 1.3750 targets 1.3690. A move below 1.3770 turns the tone bearish and targets 1.3740 then 1.3710.

The medium-term technical picture remains bearish despite the intraday bullish outlook which is considered a correction unless resistance at 1.3950 is decisively broken. The momentum indicators are neutral.

For today, USDCAD support is 1.3770 and 1.3740. Resistance is 1.3830 and 1.3880. Today’s Range: 1.3760-1.3860

Motivation-Challenged

Traders watched the headlines emanating from Trump’s meeting with European leaders, but their focus was on whether Fed Powell would use his Jackson Hole podium time to announce a pivot to Fed policy. Instead of awaiting further evidence of a weakening labour market, they hope he would suggest a series of rate cuts would occur beginning September 17. And they expect to find clues about the Fed’s concerns with the employment situation in the FOMC minutes released tomorrow.

Taking Stock

Asian equity markets closed lower on profit taking ahead of the FOMC minutes tomorrow and Powell’s speech Friday. Australia’s ASX 200 lost 0.70% while Japan’s Topix dropped 0.14%. The Hong Kong Hang Seng closed down 0.21%.

As of 5:40 am PDT, European bourses appear to be upbeat about the Ukraine-Russia ceasefire progress and boosted equities. The French CAC-40 Index has gained 0.93%, the German DAX is up 0.30%, as is the U.K. FTSE 100. S&P 500 futures are down flat and the 10-year Treasury yield is at 4.314%. Gold (XAUUSD) is 3335.50 and the U.S. Dollar Index (DXY) sits at 98.09 after hitting 98.21 overnight.

EURUSD

EURUSD is clawing back some of yesterday’s losses and rallied from 1.1639 to 1.1692 as traders juggle for position ahead of the FOMC minutes and Powell’s speech. It may be all for naught, as the latest inflation data suggests Powell can justify leaving monetary policy unchanged.

GBPUSD

GBPUSD traded firmer in a 1.3487-1.3535 range and is near the top in NY trading and is supported by the August uptrend which remains intact while prices are above 1.3480.

USDJPY

USDJPY was defensive in a 147.54-148.11 range with traders awaiting fresh catalysts. Prices garnered a bit of support after the 10-year US Treasury yield ticked up to 4.347% from 4.28% yesterday.

AUDUSD

AUDUSD chopped about in a 0.6477-0.6498 range. Australians appear to be feeling better following recent rate cuts as the Westpac Consumer Confidence Sentiment rose 5.7% in July, to 98.5. However, since the number is still below 100, pessimists rule.

USDMXN

USDMXN traded sideways in an 18.7576-18.8126 band with prices underpinned by broad US dollar strength. The minutes from the August 7 Retail Sales data and the Banxico monetary policy meeting minutes are released on Thursday.USDCNY

PBoC fix: 7.1359 vs exp. 7.1846 (Prev. 7.1322)

Shanghai Shenzhen CSI 300 fell 0.38% to 4223.37.

FX High, Low, Open

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