August 20, 2025

USDCAD open 1.3876, overnight range 1.3854-1.3884, close 1.3869

USDCAD surged yesterday and blew through resistance in the 1.3720-30 zone which had contained prices since August 1. A wave of risk aversion sent traders scurrying for “safe-haven” US dollars after Nvidia and Palantir, two high-flying AI stocks, plunged. The rally was also position adjusting into the release of the FOMC minutes and ahead of Powell’s Jackson Hole speech as traders may have become too complacent with hopes for a dovish Fed outcome.

WTI oil prices are bouncing in a 61.83-62.73 range supported by the 2.5-million-barrel drop in US crude inventories last week, per API, and hopes of a Russia/Ukraine ceasefire. In addition, Indian refiners have resumed buying Russian crude, according to Reuters.

Canada New Housing Price Index fell 0.1% m/m (forecast 0.1%, previous -0.2%).while the US calendar is empty.

USDCAD Technical Outlook:

The intraday technicals are bullish and looking to break resistance at 1.3890 for 1.3930 although momentum indicators suggest the move is getting stretched.  A move below 1.3840 would extend losses to 1.3810.

The medium-term picture is bullish inside a 1.3650-1.3950 band.  The break above the 100-day moving average at 1.3790 suggesting further gains toward the 200-day moving average at 1.4035.

For today, USDCAD support is 1.3840 and 1.3810. Resistance is 1.3890 and 1.3950. Today’s Range: 1.3710-1.3810.

If Wishes Were Fishes

Markets are biding their time ahead of the release of the FOMC minutes from the July 30 Fed meeting. That’s the meeting Governors Waller and Bowman left the herd and voted to cut interest rates by 25 bps. Analysts are hoping that the minutes reveal how many other members were agreeing with the two dissidents but preferring to wait to see some more data. Many traders seem to believe that the minutes will have a dovish bias.

Nevertheless, that view will not translate into action today because of a lack of actionable US data and caution ahead of Friday’s Powell speech from Jackson Hole.

Taking Stock
Asian equity markets closed mixed with talk of easing China/US trade tensions lifting Chinese and Australian stocks. The ASX 200 rose 0.25% while Hong Kong’s Hang Seng rose 0.17%. Japan’s Topix fell by 0.57%.

As of 5:30 am PDT, European bourses are trading cautiously. The German DAX is down by 0.31%, the French CAC-40 Index has risen 0.24% while the UK FTSE 100 is up 0.66%. S&P 500 futures are up 0.10% and the 10-year Treasury yield is at 4.302%. Gold (XAUUSD) is 3339.71 and the U.S. Dollar Index (DXY) sits at 98.264

EURUSD

EURUSD is trading in a 1.1623-1.1693 range after tech darlings, Nvidia and Palantir, plunged sparking a wave of risk aversion sentiment. That fueled profit-taking and broad-based US dollar demand. EURUSD bounced off its Asian low but soft German producer price data has capped gains in the 1.1655 area. ECB President Christine Lagarde is urging the EU to explore and deepen trade ties with other jurisdictions due to hostile US trade practices.

GBPUSD

GBPUSD is grinding higher in a 1.3462-1.3510 band after a test of support in the 1.3460 area held, leaving the August uptrend intact. Prices got a boost after UK inflation rose 3.8% y/y in July, higher than predicted (3.7%) and June’s 3.6%. Core CPI rose 3.8% (forecast and previous 3.7%). The results suggest that the Bank of England will leave its benchmark rate unchanged at its September 18 meeting.

USDJPY

USDJPY moved lower in a 147.15-147.82 range in part because the US 10-year Treasury yield dropped from 4.34% yesterday to 4.294% today. Japanese data disappointed as Trump’s tariffs took a huge bite out of trade (July exports -2.6% y/y, June -0.5%) while the trade balance narrowed to ¥117.5 billion from ¥152.1 billion.

AUDUSD

AUDUSD traded negatively in a 0.6426-0.6464 range, undermined by broad US dollar strength and perhaps a bit of disappointment from the news that China’s PBoC left rates unchanged.

NZDUSD

NZDUSD plunged from 0.5930 yesterday to 0.5815 today after a dovish surprise from the RBNZ. The central bank cut rates by 25 bps to 3.005 as was expected. The surprise was from news that 2 of the 6 voting members wanted a 50 bp cut and a comment from Governor Hawkesby suggesting further cuts ahead.

USDMXN

USDMXN traded in an 18.7865-18.8460 range. Traders are content to await Mexican Retail Sales data and the results of the Banxico monetary policy meeting tomorrow.

USDCNY

PBoC fix: 7.1384 vs exp. 7.1897 (Prev. 7.1359)

Shanghai Shenzhen CSI 300 rose 1.14% to 4271.39.

PBoC leaves 1 and 5 year Loan Prime Rates (LPR) unchanged at 3.00% and #.50% respectively.

Chinese stocks rally as funds rotate into stocks due easing US/China trade tensions. US Treasury Secretary Bessent indicated think right now the status quo is working pretty well. China is the biggest revenue line in the tariff income — so if it’s not broke, don’t fix it.”

FX High, Low, Open

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