July 8, 2025

USDCAD open 1.3651, overnight range 1.3638-1.3684, close 1.3683

USDCAD jumped 1.3593 to 1.3686 yesterday on the news that Trump slapped a 25% tariff on Japan and South Korea then followed up with letters to both leaders justifying his decision.  The rally quickly stalled, and prices consolidated in a 1.3638-1.3684 range overnight.

Prime Minister Mark Carney claims a new oil pipeline from Aberta to BC will probably be on a list of projects deemed to be in the national interest. Ontario and Alberta premiers, Doug Ford and Danielle Smith are expanding on that view and have signed a “memorandum of understanding” to build pipelines and refineries from Alberta to Ontario.

WTI oil traded in a 67.33-67.94 range with expected short-term demand from the US summer driving season offset by increased supply concerns and a tariff induced global economic slowdown.

It is another light day for data with the Canadian Ivey PMI index the only report of note.

USDCAD Technical Outlook:

The intraday technicals are neutral inside a 1.3610-1.3680 trading range. A topside break extends gains to 1.3760 while a downside breach targets 1.3560.

Longer term, the April downtrend line is intact while prices are below 1.3730 and looking for a break below 1.3550 to extend losses to 1.3420.

For today, USDCAD support is 1.3620 and 1.3590.  Resistance is 1.3790 and 1.3820. Today’s Range 1.3610-1.3710.

“Dear Mr Prime Minister”
President Trump sent letters to the leaders of Japan, South Korea, South Africa and others telling them how honoured he was to charge them just 25%, 30% or as much as 40% on all their exports to the United States. What a great guy. The news was telegraphed in advance, and global stock indices gained. The tariff deadline has now moved to August 1.

Taking Stock
Asian equity indexes shrugged off Trump’s love letters and rallied. Hong Kong’s Hang Seng gained 1.09%, Japan’s Topix rose 0.17% and Australia’s ASX 200 was flat.
European bourses have given up earlier gains with the German Dax sitting at 0.04% from a 0.37% rise near the NY open. The UK FTSE 100 is up 0.14% and the French CAC index is down 0.27%. S&P 500 futures are up slightly, at 0.08%-as of 5:30 am PDT.  The US 10-year Treasury yield jumped to 4.41% from 4.254% yesterday. Gold (XAUUSD) is trading at 3326.63.

EURUSD
EURUSD climbed from 1.1708 to 1.1766 before sliding to 1.1734 in NY. Traders are hoping for an EU/US trade deal that by most guesstimates will lock in a 10% tariff on EU imports into the US. The EU did not get a letter and the negotiations are ongoing as the EU, with 450 million consumers and prime travel destinations for Americans, is not without leverage. How about a $5000 per person entry fee into the EU for Americans?

GBPUSD
GBPUSD bopped and weaved in a 1.3586-1.3647 range and is trading in NY at the bottom of that band. Britain has managed to dodge the wrath of Trump after Prime Minister Keir Starmer made the trek to Washington to bow before the “Great Donnie.” Trump’s tariff letter onslaught. The Office of Budget Responsibility (OBR) warned that UK public debt is on track to hit 270% of GDP by 2070 which is three times higher than the current 95% level. Goldman Sachs analysts aren’t concerned—they expect GBPUSD to rise into year end.

USDJPY
USDJPY surged from 145.83 to 146.45 on the news that Trump sent Japanese Prime Minister Shigeru Ishiba notifying him that it is a “Great Honor” to only charge a 25% tariff to demonstrate the strength and commitment of our “Trading Relationship.” The tariff letter also lowered the odds for a hawkish BoJ interest rate outlook at its July 31 meeting.

AUDUSD
AUDUSD rallied sharply, rising from 0.6490 to 0.6558 after the RBA surprised almost everyone and left interest rates unchanged at 3.85%. Policymakers decided to stay the course and await further information to confirm that inflation was slowing, which seems prudent in the face of Trump’s tariff salvo. The June NAB Business Survey showed Business Conditions and Business Confidence rising to 9 and 5 from 0 and 2 in May.

NZDUSD
NZDUSD climbed from 0.5994 to 0.6036 in part because Trump’s tariff deadline was punted to August 1 from July 9. The RBNZ is expected to leave rates unchanged tomorrow.

USDMXN
USDMXN traded defensively in a 18.6108-18.6701 range after the US dollar came under broad-based selling pressure following Trump’s barrage of tariff letters. The USDMXN technical picture is bearish while prices are below 19.0400 and looking for a break below 18.5000 to extend losses to 18.1500.

USDCNY

PBoC fix: 7.1534 vs exp. 7.1772 (Prev. 7.1506)

Shanghai Shenzhen 300 rose 0.84% to 3998.45

China warned Trump administration against reigniting trade wars by imposing tariffs on august 1.  China is also threatening to retaliate against nations that sign deals with the US that harm China’s interests.

The Peterson Institute for Economics claims that the average US tariff on goods imported from China is 51.1% while China puts a 32.6% tariff on US goods.

FX High, Low, Open

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance