USD/CAD Tests 1.3760 Support as CPI Data Weakens USD

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3640-1.3890

Euro                 1.6000-1.6250

Sterling            1.8540-1.8790

WTI Oil (opening level) $62.68

The CAD/USD is opening at 1.3761 ( 0.7267 )

USD/CAD reversed bearishly from the intraday peak just above 1.38 yesterday and is leaning a little harder on short-term consolidation support at 1.3760 in early trade. The CAD needs to secure a clear break below this point to extend gains in the short run and retest USD support at 1.3720/30.

A break below here targets a drop to the mid/upper 1.36s. Resistance is 1.3810/15.

Headlines

·    Underlying US inflation quickened in July, with the core consumer price index rising 0.3% from June (3.1% yoy vs 3% est), driven by higher services prices such as airfares, medical care, and recreation. Tariff-exposed goods costs rose less than anticipated, reinforcing expectations for a Federal Reserve rate cut next month. The core CPI, excluding volatile food and energy items, marked its strongest increase since the year's start, matching economists' predictions alongside the overall monthly CPI, according to Bureau of Labor Statistics data.

·    After the publishing of the US inflation figures, Trump complained again of Fed Chair Powell’s lack of action and said he was considering a lawsuit against Powell for cost overruns related to the renovation of the Fed’s HQ.

·    Trump’s choice to head the BLS, EJ Antoni, said it should stop reporting inaccurate monthly jobs numbers, waiting for the more accurate quarterly numbers instead until a better method of collecting data can be devised as bad data has far reaching consequences.

·    US tariff revenue hit a new monthly record in July, yet it couldn't thwart a growing budget deficit, highlighting ongoing fiscal challenges for the federal government. Customs duties soared to $28 billion, a 273% increase over July last year, according to a Treasury Department release on Tuesday. Meanwhile, the budget deficit reached $291 billion, a 10% rise from the same month last year, considering calendar adjustments.

·    Japan's producer prices rose 2.6% year-on-year in July 2025, slightly above forecasts and marking the lowest inflation since August 2024. Several sectors, including transport equipment and food, saw cost moderation, while prices for chemicals and steel continued to fall.

·    Trump may consider expanding the revenue share agreement on China chip sales to companies beyond Nvidia and AMD, while China encourages firms not to use Nvidia and AMD chips.

·    Treasury Secretary Scott Bessent suggested that the Federal Reserve ought to be open to a bigger, 50 basis-point cut in the benchmark interest rate next month. Bessent said he was “hopeful” that Trump’s pick for the currently open position on the Fed board, Stephen Miran, will be in place in time for the Sept. 16-17 policy meeting. 

Key Points

·    Equities: US records; Europe/Asia follow; trade truce lifts sentiment

·    Volatility: VIX at 14.73; calm near term; SPX ±22 points expected

·    Digital assets: ETH near highs; strong ETHA inflows; IBIT positive; altcoins firm

·    Fixed Income: US short yields lower after CPI, Long European yields hit new highs

·    Currencies: US dollar weaker after the CPI data.

·    Commodities: Crude, gold steady; US supply/demand report sinks corn, lifts soybeans