USD / CAD - Canadian dollar rallies further
- Trump announces trade deal with Japan
- Global equity indexes rise as risk sentiment improves
- US opens with losses across the board.
USDCAD open 1.3582, overnight range 1.3579-1.3613, close 1.3606, WTI 64.96, Gold 3431.33
The Canadian dollar extended yesterdays rally due to improved risk sentiment following trade deal announcements.
Prime Minister Carney appears unfazed by the looming August 1 tariff deal deadline imposed by President Trump, a stance that seems to be shared by the majority of provincial premiers. While Carney acknowledged that any forthcoming agreement would likely include tariffs, he emphasized that he wasn’t willing to strike a deal “at any cost.”
WTI crude prices are under pressure, slipping from 65.76 to 64.76 during early New York trading. Hopes for stronger oil demand driven by new trade agreements are helping to counterbalance worries over tighter supply stemming from stricter EU sanctions on Russian exports.
President Trump claimed on social media, “We just completed a massive Deal with Japan, perhaps the largest Deal ever made.” The announcement added a touch of optimism to otherwise sluggish summer trading conditions. Markets are also eyeing upcoming U.S.–China trade talks scheduled for Monday and Tuesday in Sweden, bolstered by Treasury Secretary Bessent's comment that the August 1 tariff deadline could be extended.
The Japan trade news helped spark a rally across Asian equity markets. Japan’s Topix surged 3.18%, led by gains in automakers. Hong Kong’s Hang Seng index climbed 1.62%, while Australia’s ASX 200 added 0.69%. European markets are also on the upswing. The CAC 40 gained 1.31%, the DAX rose 0.71%, and the FTSE 100 advanced 0.60%. U.S. equity futures were more measured, with S&P 500 futures edging up 0.40%. The 10-year U.S. Treasury yield held steady at 4.37%. Gold prices consolidated in a 3416.51–3439.09 band as of 6:47 am EDT, after advancing the previous day.
EURUSD moved sideways within a 1.1727–1.1757 band, reflecting cautious optimism from recent trade developments. However, most traders are staying on the sidelines ahead of Thursday’s flood of Eurozone PMI data and the European Central Bank meeting, where no change to interest rates is expected.
GBPUSD traded between 1.3515 and 1.3549, supported by broader risk-on sentiment. However, lingering concerns about UK debt and political friction capped gains. Chancellor Rachel Reeves criticized current financial regulations as stifling business, calling them a “boot on the neck,” while Bank of England Governor Andrew Bailey defended the need for ring-fencing to separate retail and investment banking.
USDJPY chopped about in a146.20 and 147.21 band, caught between the optimism of the U.S.–Japan deal and rumors swirling around Prime Minister Shigeru Ishida’s possible resignation. The PM publicly dismissed the speculation. Meanwhile, the Bank of Japan’s Deputy Governor reiterated the need for continued policy accommodation due to external trade uncertainty.
AUDUSD climbed within a 0.6546–0.6587 range. Gains were driven by positive sentiment surrounding Trump’s latest tariff agreements, particularly with Japan and the Philippines, as well as hopes that the U.S. may delay imposing new tariffs on China. These developments improved appetite for risk-sensitive currencies like the Aussie.
US and Canadian housing data is ahead.
