Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3940-1.4190
Euro 1.5930-1.6180
Sterling 1.8700-1.8950
WTI Oil (opening level) $80.08
The CAD/USD is opening at 1.4063 ( 0.7111 )
CAD has benefited from weaker United States Consumer Price Index and higher Oil prices, with spreads pointing to modest further gains versus the USD.
Expect the Bank of Canada to remain on hold, stress a sizeable output gap and mixed data, and warns that current rates pricing leaves CAD risks skewed to the downside.
Headlines
· Federal Reserve Chair Kevin Warsh said June's easing inflation does not signal mission accomplished, reaffirming the Fed's commitment to restoring price stability. While stressing that the economy remains on solid footing, supported by AI and data centre investment, a resilient labour market and steady consumer spending, he also indicated that interest rates remain a potential tool if needed. His remarks were seen as his clearest indication yet that further policy tightening remains an option, although not necessarily in the near term.
· US annual inflation fell to 3.5% in June 2026 from 4.2% in May, below the 3.8% forecast, as energy inflation eased sharply following a US–Iran ceasefire. Shelter and food inflation also ticked down. Month-over-month, CPI dropped 0.4%, the biggest fall since April 2020, driven by a 5.7% decline in energy and a 9.7% drop in gasoline. Core inflation fell to 2.6% from 2.9%, with core CPI flat on the month.
· Trump has abandoned plans to impose a 20% levy on cargo transiting the Strait of Hormuz after Gulf allies urged him to reconsider. Instead, Trump said the expected revenue would be offset by forthcoming direct investment commitments from Gulf states, although no details were provided. At the same time, the US announced it had reinstated its blockade on Iranian shipping to and from the country's ports and coastal waters, while US Central Command carried out a new wave of strikes against targets near the Strait of Hormuz and along Iran's coastline.
· China's economy slowed more than expected in the second quarter, with annual GDP growth easing to 4.3%, the weakest pace in more than three years. The disappointing data, including weaker fixed-asset investment and subdued retail sales, strengthens the case for additional fiscal support and infrastructure spending when the Politburo meets later this month. Industrial production remained relatively resilient, while the urban unemployment rate edged down to 5%.
Key Points
· Equities: US and European equities edged higher on softer inflation, while Asian technology shares rallied sharply and mainland China lagged.
· Volatility: Soft CPI removed a July Fed hike and revived the chip trade, VIX eased, PPI ahead
· Digital Assets: Crypto equities and ETFs rallied on soft CPI, spot eased overnight as ETF inflows and regulation advanced
· Commodities: Oil holds gains after fresh US strikes; gold gives back CPI-driven rally as energy prices and Warsh weigh
· Fixed Income: US bond yields decline, led by the front
· Currencies: Broad but modest dollar retreat after soft CPI