- Canada hit with 35% tariff effective today
- US employment data, ISM PMI and Michigan Consumer Confidence ahead.
- US dollar extended this week’s gains.
USDCAD open 1.3878, overnight range 1.3843-1.3876, close 1.3856, WTI 69.09, Gold 3294.89
The Canadian dollar is on the ropes after being pummeled by tariffs, divergent Fed and BoC interest rate policy outlooks, and a general risk-averse tone in markets.
Trump’s tariff hammer came down hard on Canada with a 35% levy slapped on imports not covered by the USMCA, citing fentanyl trafficking as the excuse. Mexico—arguably a more prominent source—was spared, granted a 90-day grace period. Other countries caught in the crossfire included India (25%), Switzerland (39%), Brazil (50%), and New Zealand (15%).
US economic data is in the spotlight. Nonfarm payrolls are expected to show a gain of 110,000, down from last month’s 147,000, while the jobless rate is forecast to rise slightly to 4.2% from 4.1%.
ISM Manufacturing PMI is projected to inch up to 49.5 from 49, with the prices paid index nudging to 70 from 69.7. The University of Michigan’s consumer sentiment index is expected to tick up to 62 from 61.8.
Stock markets didn’t like what they saw. In Asia, the Hang Seng slipped 1.07% and Australia’s ASX 200 dropped 0.92%, while Japan’s Topix managed a modest 0.19% gain. European equities are bleeding out, with the CAC-40 down 1.88%, the DAX off 1.57%, and the FTSE 100 slipping 0.61%. S&P 500 futures were 1.09% lower at 7:00 am. The U.S. dollar index firmed to 100.12, gold hovered near 3300.10, and the 10-year Treasury yield nudged up to 4.40%.
EURUSD traded in a 1.1393–1.1439 range and remained soft as Eurozone inflation and manufacturing data came in as expected, offering traders little incentive ahead of the U.S. numbers.
GBPUSD drifted lower within a 1.3142–1.3219 range, pressured by persistent U.S. dollar demand, downbeat U.K. PMI data, and speculation that the Bank of England may strike a dovish tone next week.
USDJPY moved sideways in a 150.32–150.91 band, supported by receding hopes for a BoJ rate hike and firm U.S. yields. A slight improvement in Manufacturing PMI, from 48.8 to 48.9, offered minimal support.
AUDUSD was confined to a 0.6419–0.6441 range as demand for AUDNZD provided some lift, although weaker-than-expected Australian Manufacturing PMI (51.3 vs. 51.6 in June) weighed slightly on sentiment.
