- Trump’s unleashes new tariff barrage.
- Canada’s economy expected to have grown a mere 0.1% in July.
- US dollar opens with a bid but its off its best levels.
USDCAD open 1.3951, overnight range 1.3925-1.3959, close, 1.3942, WTI 64.73, Gold 3752.06
The Canadian dollar is chopping through major support levels with the latest losses spurred on by yesterday’s US data. Weekly jobless claims, durable goods orders and weekly jobless claims reports suggested that the Fed could be less aggressive in trimming rates.
Trump’s latest tariff salvo on pharmaceuticals, heavy trucks and furniture spooked traders overnight, even though US courts have ruled levying tariffs exceeds his authority.
Today’s July GDP data is likely to encourage USDCAD bulls if it confirms that the economy is weaker than expected. July GDP is expected at 0.1%. A negative reading should send USDCAD to 1.4000.
European leaders warned Moscow that another airspace violation would see Russian aircraft shot down. The bigger question is whether the first casualty could trigger a crisis reminiscent of Archduke Ferdinand’s flight into history. The message seems lost on Russia’s military, as multiple unidentified drones were spotted over Danish airports.
Just a month after the U.S. Court of Appeals ruled most tariffs under the International Emergency Economic Powers Act illegal, Trump rolled out another wave of duties. Starting October 1, branded pharmaceuticals will face 100% tariffs, heavy trucks 50%, and a wide swath of goods from vanities to furniture between 30–50%. The administration has not clarified whether recently signed trade deals shield any countries from the measures.
Markets shrugged off the tariff news for now, but today’s PCE release could prove far more disruptive. The Fed’s preferred inflation gauge, core-PCE, is expected to hold steady at 2.9% y/y in August.
Asian equity markets were mixed. Japan’s Topix set a fresh record high before closing 0.5% stronger. Australia’s ASX 200 edged up 0.17%, while Hong Kong’s Hang Seng slid 1.35% on the tariff headlines.
By 7:20 am EDT, Europe looked more upbeat. Germany’s DAX gained 0.28%, France’s CAC-40 rose 0.39%, and the UK’s FTSE 100 added 0.35%. S&P 500 futures were flat. The U.S. dollar index (DXY) sat at 98.4, gold traded at $3,750.78, and the 10-year Treasury yield was 4.17%.
EURUSD traded in a 1.1657–1.1688 band, consolidating after slipping on strong U.S. data. A softer PCE reading could spark a rebound, though geopolitical tensions over Russia may keep gains in check.
GBPUSD moved between 1.3329–1.3371 as sterling faced another round of pressure. Weak UK PMI results, budget strains, and muddled Bank of England signals combined with firm U.S. data to weigh on the currency.
USDJPY held to a 149.62–149.96 range after rallying on yield spreads. The 10-year Treasury yield climbed from 4.099% Wednesday to 4.192% this morning, keeping pressure on the yen. Tokyo core-CPI eased to 2.5% y/y from 3.0%.
AUDUSD slipped to the lower end of its 0.6521–0.6545 range. Traders cited profit-taking and renewed U.S. dollar demand sparked by the latest tariff announcements.
Today’s data includes: US GDP, Jobless Claims and, and Durable Goods Orders.
