Falling Oil Prices Pressure CAD Despite Positive US Economic Outlook

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

US Dollar        1.3680-1.3920

Euro                 1.5790-1.6050

Sterling            1.8190-1.8450

WTI Oil (opening level) $65.59

The CAD/USD is opening at 1.3803 ( 0.7245 )

The USD is trimming losses, as the dust from the disappointing US Nonfarm Payrolls report settles. The CAD is struggling amid lower Oil prices, which are offsetting the impact of soft US macroeconomic figures and market expectations of upcoming Fed rate cuts.

The USD appreciates moderately alongside higher US Treasury yields. The pair is testing the 1.3800 mark, after bouncing at 1.3760 lows on Friday, still, well below last week’s highs, at 1.3880. 

Headlines

·    U.S. markets rallied Monday, reversing most of Friday’s weak US-data driven slump amid increased rate cut hopes, while Berkshire Hathaway warned that Trump’s proposed tariffs—especially those targeting India over Russian oil—could hurt both its business and U.S.-India trade

·    US manufactured goods orders fell 4.8% in June 2025, nearly matching expectations, marking the largest decline since April 2020. Transportation equipment orders dropped 22.4%, civilian aircraft orders fell 51.8%, and ship and boat orders decreased 20.0%, reversing large gains from May.

·    Trump threatens a substantial tariff hike on India for buying Russian oil and selling it for large profits. The US is threatening secondary sanctions on countries that purchase Russian energy, with Matt Whitaker, the US ambassador to NATO, saying such sanctions are an "obvious next step" to try to bring the war in Ukraine to an end

·    The Swiss government stated it isn't contemplating countermeasures against the US right now and is prepared to present a more appealing offer.

·    A Japanese Labour Ministry panel suggested a 63 yen, or 6.0%, increase in the average minimum hourly wage for this fiscal year, the largest since at least 2002, compared to last year's 50-yen hike.

·    US Treasury Secretary Bessent said Washington is hopeful for a deal with China after trade talks in Stockholm. Meanwhile, China's leaders pledged economic support and to curb "disorderly competition." Beijing announced its fourth plenum in October, likely addressing the next five-year plan.

·    A chorus of stock market prognosticators at some of Wall Street’s biggest firms is warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data. Despite the near-term concerns, the warnings come with a big bullish caveat: In the event of a dip, buy it, with strategists emphasizing that the long-term bull market in stocks is still intact. (Bloomberg)

Key Points

·    Equities: Fed cut hopes lift global stocks; strong earnings; Lloyds, Palantir, Meta shine

·    Volatility: VIX tumbles to 17.5; expected SPX move ±70pts today, ±115pts by Friday

·    Digital assets: ETHA +4.7%; IBIT rebounds; ETH activity surges; MSTR, COIN, CIFR rally

·    Fixed Income: Market quiet after Friday’s shock drop in US treasury yields. 3-year US treasury auction today.

·    Currencies: Japanese yen rallies further, USD sideways

·    Commodities: Rising supply weighing on crude; Metals supported by US rate cut hopes