Quantum Tech Enters Finance: HSBC + IBM Heron

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

US Dollar        1.3770-1.4020

Euro                 1.6190-1.6440

Sterling            1.8550-1.8000

WTI Oil (opening level) $64.47

The CAD/USD is opening at 1.3898 ( 0.7195 )

With the USD/CAD trading around 1.3890's, the pair has moved more than 0.5% since I last wrote.

Bank of Canada Governor Tiff Macklem said Monday that Canada must pursue a “more independent course” from the US, citing the Dollar’s weakness and warning of systemic risks from shifting global trade and financial flows.

The US Dollar gained ground as the US Federal Reserve Chair Jerome Powell struck a cautious note, stressing that the US central bank must weigh stubborn inflation against a softening job market, calling it “a challenging situation” and reiterating comments from last week. However, the CME FedWatch tool suggests that money markets are currently pricing in nearly a 92% possibility of a Fed rate cut in October, up from 87% a week earlier.

Traders would likely observe the upcoming US Q2 Gross Domestic Product Annualized later today. Focus will shift toward Personal Consumption Expenditures Price Index data, the Federal Reserve’s preferred inflation gauge, due later on Friday.

Going forward, a recovery move by the pair above the August 22 high of 1.3925 would open the door towards the May 15 high of 1.4000, followed by the April 9 low of 1.4075.

On the flip side, it could slide towards the round level of 1.3600 and the June 16 low of 1.3540 if it breaks below the August 7 low of 1.3722.

Headlines

·    HSBC said it had used IBM’s Heron quantum processor for a better understanding of the probability that corporate bonds would sell at a given price, potentially enhancing market efficiency.

·    U.S. single-family home sales surged 20.5% in August 2025 to an annual rate of 800K units, the highest since January 2022, likely lifted by builder’s price cuts and sales incentives.

·    Germany's Ifo Business Climate Index dropped to 87.7 in September 2025, the lowest since May, missing market expectations and reflecting growing pessimism. Both expectations and current conditions worsened amid uncertainty over US tariff policy.

·    The average 30-year fixed mortgage rate in the U.S. dropped to 6.34% in the week ending September 19, 2025, the lowest since September 2024, following a fourth consecutive weekly decline. This decrease aligns with lower Treasury yields after the Fed cut rates by 25bps and indicated further cuts.

Key Points

·    Equities: US slipped on tech softness; Europe edged lower as luxury fell while energy and defence rose; Asia firmer with Hong Kong rebounding despite typhoon disruption

·    Volatility: PCE, GDP, Powell drive focus, VIX steady but jumpy

·    Digital Assets: ETH exchange supply hits 9-yr low, XRP CME OI grows

·    Currencies: USD firms again, especially versus a weak yen.

·    Commodities: Copper jumps on material supply disruptions. Crude near range top

·    Fixed Income: US yields rise all along the curve