August 29, 2025

USDCAD open 1.3756, overnight range 1.3737-1.3779, close 1.3749

USDCAD is consolidating yesterday’s losses but is trading near the top of the overnight band. The selling pressure occurred from a mix of broad US dollar weakness on lower Treasury yields, dovish comments by Fed Governor Christopher Waller, and bearish USDCAD technicals.

Governor Waller said he would support a 25 bp rate cut in September and that he fully expects additional rate cuts will follow. His comments are not a surprise as he is lobbying for Powell’s job and saying everything Trump wants to hear.

Canada Q2 GDP fell 0.4% compared to a 0.5% gain previously and it was due to a 7.5% drop in exports. USDCAD popped to 1.3779 from 1.3750 on the news.

WTI oil is closing out the week with a small gain, having risen from 63.15 on Tuesday to 64.38 today, but it has lost around $6.00 this month. India is claiming that favourable prices are behind its increase in purchases of US crude. And those prices look more favourable in the face of 50% US tariffs.

It’s month-end and the over 2.5% rise in the S&P 500 points to USDCAD selling as portfolios get rebalanced. It’s also a long weekend in Canada and the US so expect liquidity to evaporate after 12 noon.

USDCAD Technical Outlook:

The intraday technicals are bearish while trading below 1.3780 and looking for a break below 1.3720 to target 1.3680, then 1.3650. A topside break suggests a move to 1.3850.

The medium-term picture is bearish below 1.3810 and looking for a break of support at 1.3720 to extend losses to 1.3520. A move above 1.3810 targets 1.3870.

For today, USDCAD support is 1.3710 and 1.3680. Resistance is 1.3780 and 1.3830. Today’s Range: 1.3710-1.3810.

Saying “So Long” to Lisa Cook

It is easy to dismiss Trump’s attempt to fire Fed Governor Lisa Cook as grandstanding and hyperbole in the President’s quest to remake the Fed in his own image. But you can’t. The man has a point. Fed Governor Lisa Cook cooked the books (so to speak) when she lied on mortgage applications. It is no surprise that she is claiming “clerical error,” but a person with her education and background would certainly know where her primary residence was. Her demonstrated dishonesty is reason enough to remove her from the Fed.

Inflation vs Jobs

Fed Chair Jerome Powell shifted his focus from inflation to employment last week in Jackson Hole. Although he avoided saying price increases from Trump’s tariffs were “transitory” and instead said the increase would largely be a “one-time step up.” That was after BLS revisions to nonfarm payrolls showed that America was hemorrhaging jobs. That is a long-winded way of saying that today’s PCE Price Index will be quickly forgotten ahead of next Friday’s employment report. The US dollar index is little changed after PCE prices came in at or close to expectations.  Let the long weekend begin.

Taking Stock

Asian equity indexes closed mixed. Japan’s Topix fell 0.47% and Australia’s ASX200 was flat. Hong Kong’s Hang Seng rose 0.32%.

As of 6:30 am EDT, the French CAC-40 and German DAX indexes are down 0.51% while the UK FTSE 100 and S&P 500 futures are down 0.33%. The US 10-year Treasury yield is at 4.219%. Gold (XAUUSD) is 3406.12, and the US Dollar Index (DXY) is 98.02.

EURUSD

EURUSD is grinding higher in a 1.1656-1.1691 range but retreated from the top following a slew of slightly softer inflation reports from EU countries and a drop in German Retail Sales to 1.9% y/y from 4.9% previously. The data did nothing to alter the consensus view that the ECB will leave rates unchanged at its September meeting.

GBPUSD

GBPUSD is trading with a negative bias and fell from 1.3514 to 1.3461 where it sits in NY. And that happened despite a Lloyds Bank poll that said business confidence rose to its highest level since 2014. Lloyds Bank wrote, “This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy.” GBPUSD selling pressure was due to profit-taking after this week’s rally, ahead of today’s US PCE Price Index data.

USDJPY

USDJPY chopped about in a 146.77-147.20 range and is trading at 147.09 in NY. A slew of domestic economic reports painted a mixed picture leaving traders none the wiser. Japanese Industrial Production fell -1.6% m/m (forecast -1.0%, June 2.1%) while Retail Sales rose 0.3% (forecast 1.8%). Japan’s Unemployment Rate dropped to 2.3% from 2.5% in June vs. exp. 2.5% (prev. 2.5%). Tokyo inflation ticked down to 3.0% from 3.1%.

AUDUSD

AUDUSD extended yesterday’s range and traded in a 0.6527-0.6543 overnight. Prices were supported by dovish comments from Fed officials while Tuesday’s hotter-than-expected Australian CPI numbers reduced the odds of a near-term RBA rate cut.

USDMXN

USDMXN inched higher in an 18.6470-18.7094 range and it is near the top of that band in early NY trading. Wednesday, BoA analysts wrote that Mexican remittances have dropped to their lowest level in 3 years (estimated 5.0%). They concluded that falling interest rates and slowing remittances would support USDMXN. The Mexican employment market remains robust with the jobless rate sitting at 2.8% in July (forecast 2.9%, June 2.7%).

USDCNY

PBoC fix: 7.1030 vs exp. 7.1274 (Prev. 7.1063)

Shanghai Shenzhen CSI 300 rose 0.74% to 4496.76

FX High, Low, Open

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