USD / CAD - Canadian dollar dives
- Risk aversion rises as tariff deadline nears
- Opec raises production more than expected.
- US dollar opens with gains across the board
USDCAD open 1.3674, overnight range 1.3593-1.3686, close 1.3605, WTI 67.13, Gold 3309.25
The Canadian dollar plunged overnight as it was caught up in a wave of risk aversion because Trump’s July 9, tariff deadline was approaching. It fueled a broad-based demand for safe-haven US dollars.
The sell-off did not have anything to with Canadian-centric issues although they will become more important closer to July 21. That’s the date Prime Minister Carney has set for a US/Canadian tariff deal to prevent counter-tariff measures on the US.
WTI climbed within a 65.55–67.18 band, showing resilience in the face of rising output. OPEC unexpectedly boosted production, announcing a planned increase of 548,000 barrels per day starting August 1.
Tariff threats are making their rounds today, with the U.S. dispatching warning letters to a dozen countries. Recipients are being advised that failure to meet American trade demands will see tariff rates reinstated to the April 2 "Liberation Day" levels. However, those measures would not be activated until August 1, giving trade partners a narrow window to respond.
President Trump lashed out at BRICS, now including Indonesia, Saudi Arabia, the UAE, Iran, and Ethiopia, following the group’s joint criticism of tariff policies. Trump labeled the bloc anti-American and warned that any nation aligning with it could be slapped with an additional 10% import levy.
Asian stock markets ended the session lower amid mounting trade tensions. Japan’s Topix declined 0.57%, Australia’s ASX 200 dropped 0.16%, and Hong Kong’s Hang Seng edged down 0.12%. In contrast, European markets brushed off the tariff headlines. A 0.65% gain in the German DAX helped lift broader sentiment. The CAC 40 posted a modest 0.12% rise, while the FTSE 100 was flat. In the US, S&P 500 futures slipped 0.26%. Gold fell $26.72 to 3309.82, and the yield on 10-year Treasuries stood at 4.353%.
EURUSD retreated from 1.1791 to 1.1723 as risk aversion took hold ahead of looming tariff deadlines. Demand for the US dollar increased, especially after Trump floated the idea of a 50% tariff on all EU exports unless a trade deal is reached. The euro also suffered after Eurozone retail sales posted a 0.7% monthly decline for May, erasing the boost from a better-than-expected 1.2% rebound in German industrial production.
GBPUSD was under pressure, slipping within a 1.3575–1.3662 range. The stronger greenback weighed on sentiment, and concerns about domestic fiscal tightening—including potential UK tax increases—added to the bearish tone. Speculation is also mounting that the Bank of England could trim rates at its August 7 meeting.
USDJPY hovered near the upper end of its 144.23–145.53 range after Japanese wage growth for May came in well below expectations at just 1.0% year-over-year. With pay increases declining for a fifth straight month, the inflation outlook is dimmer, reducing the likelihood of any near-term policy tightening by the Bank of Japan. US Treasury yield gains also provided upward support.
AUDUSD came under heavy selling pressure, falling from 0.6565 to 0.6486 as traders braced for tariff fallout and priced in expectations of a 25-basis point rate cut by the Reserve Bank of Australia, which meets tomorrow.
The Canadian and US economic calendars are empty.
