Canadian Dollar Hits Weakest Point Since April Amid US-China Trade Deal Boosting USD

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

US Dollar        1.3870-1.4100

Euro                 1.5430-1.5670

Sterling            1.8360-1.8600

WTI Oil (opening level) $62.61

The CAD/USD is opening at 1.3991 ( 0.7148 )

The Canadian Dollar marked its weakest point since April 10 against the Greenback after a US-China trade deal gave the USD a boost.

The easing of trade tensions between the world’s two largest economies gives investors their clearest indication yet that Trump is taking a softer approach than expected. This raises hope that the US economy can avoid a recession, which, in turn, lifts the USD broadly. 

Headlines

·    The US and China agreed to a massive de-escalation in tariffs announcing yesterday morning that the US will slash duties on Chinese products to 30% from 145% for a 90-day period, and Beijing dropping its levy on most US goods to 10%. The deal included the suspension of the elevated "reciprocal" tariff, the establishment of a point person for talks, and agreements on fentanyl and tariffs.

·    The FT reports that the European Commission is laying the groundwork for capital controls and tariffs against Russia in the event Hungary blocks the extension of the existing sanctions regime

·    UK April Payrolled employees fell -33k vs. -32k expected, while the Jobless Claims Change for the month was +5.2k, although the March claims number was revised lower to -16.9k versus the original +18.7k. This took the revised March claimant count rate down to 4.5% from 4.6% and April’s rate was also at 4.5%. The ILO 3-month average unemployment rate rose to 4.5% from February’s 4.4% as expected. Average Weekly Earnings in March rose 5.5% YoY vs. 5.2% expected, vs. 5.7% in Feb.

·    UK retail sales rose by 6.8% in April 2025, the fastest growth in over three years, exceeding the expected 2.4%. This contrasts with a 4.4% decline in April 2024, aided by favourable spring weather and Easter falling in April. Food sales increased by 8.2%, compared to a 1.6% drop last year.

·    Trump signed an executive order asking drug makers to lower prices voluntarily to levels paid abroad or face regulatory measures. The order, however, was considered vague and weaker than expected with pharmaceutical companies bouncing following an early Monday slump.

Key Points

·    Equities: US-China tariff truce; significant global equity rally; megacap tech gains; pharmaceuticals weaker

·    Volatility: VIX sharply lower post-trade truce; CPI data crucial for direction

·    Digital assets: Bitcoin near highs; Coinbase joins S&P 500; significant BTC withdrawals suggest bullish accumulation

·    Fixed Income: Yields have leaped higher globally on surge in risk sentiment on hopes US trade policy set to soften from here.

·    Currencies: USD has rallied hard, CNH even harder, on US-China trade war pause

·    Commodities: Wheat prices slump. Gold rebounds after weathering bearish storm.