Japan Headlines Dominate FX, Canadian Dollar Unmoved

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

US Dollar        1.3830-1.4080

Euro                 1.6170-1.6420

Sterling            1.8620-1.8870

WTI Oil (opening level) $61.72

The CAD/USD is opening at 1.3958 ( 0.7164 )

USD/CAD remains subdued, trading around 1.3950 overnight. The technical analysis of the daily chart suggests the weakening of the bullish bias.

The 14-day Relative Strength Index stays above the 50 level, suggesting that bullish bias is still active. Additionally, the USD/CAD pair remains above the nine-day Exponential Moving Average, indicating the short-term price momentum is stronger.

If the USD/CAD pair rebounds within the ascending channel, it may target its primary barrier at the six-month high of 1.4016, which was reached on May 13. A break above this level would lead the pair to test the upper boundary of the ascending channel around 1.4110.

On the downside, the USD/CAD pair may find its initial support at the nine-day EMA of 1.3925. A break below this level would dampen the short-term price momentum and put downward pressure on the pair to navigate around the 50-day EMA at 1.3828.

Headlines

 Japan’s LDP leadership election resulted in a shock victory for conservative-leaning fiscal dove Sanae Takaichi, just days after odds were thought to have tilted in favour of another candidate. Takaichi has proposed increased local government subsidies, eliminating the extra gasoline tax, and reducing diesel fuel costs. She is considering lowering the consumption tax and pledged to honor US agreements. The news triggered a massive slide in the Japanese yen, a dramatic steepening in Japan’s yield curve as long JGB yields rose sharply, and a huge rally in Japanese stocks, with the major indices there hitting record highs and the Nikkei up nearly 5% at one point.

OPEC+ will raise oil output from November by 137,000 barrels per day, opting for the same modest monthly increase as in October amid persistent worries over a looming supply glut into 2026. In the run-up to the meeting, Russia (less) and Saudi Arabia (more), the two biggest producers in the OPEC+ group, had different views, sources have said.

Gold’s biggest rally since the 1970s is being stoked by investors fearful of missing out on returns and worried about inflation add the precious metal to their portfolios. The bullion price has rocketed nearly 50% this year to a record high near USD 4,000 a troy ounce after Trump’s trade war sparked a rush to haven assets and sent the dollar tumbling.

The US September ISM Services PMI fell to 50.  In September 2025 from 52 in August, below the 51.7 forecast, indicating a stall. Business activity remained stable, new orders slowed, and inventories contracted. Employment continued in contraction due to delayed hiring and staffing challenges. Price pressures intensified, with the index at 69.4, its second-highest since October 2022. Supplier delivery rates were the slowest since February, while backlog contraction eased. Ten industries grew, two fewer than August, as the number contracting rose to seven.

Trump blamed Democrats for the US government shutdown and potential layoffs, while NEC Director Hassett said mass federal layoffs will start if Trump views shutdown talks as unproductive.

Cocoa futures slumped 10% last week to a 1½-year low, pressured by expectations that higher farm-gate prices in Ghana and Ivory Coast will unlock previously withheld stocks and support improved crop sales and future supply.

Key Points

·    Equities: US mixed on Friday, with tech weaker even as S&P 500 ekes out new record

·    Volatility: Sideways volatility.

·    Digital Assets: Bitcoin rallied to a record at the weekend before easing back.

·    Currencies: JPY blasted lower on bombshell news of Takaichi election

·    Commodities: Gold hits fresh record, crude steadies on modest OPEC+ hike

·    Fixed Income: Japan’s yield curve steepens dramatically