Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3920-1.4170
Euro 1.5900 -1.6150
Sterling 1.8680-1.8930
WTI Oil (opening level) $83.83
The CAD/USD is opening at 1.4041 ( 0.7122 )
Today's US economic docket features the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index. The crucial data will influence market expectations about the US Federal Reserve's future policy path amid bets for at least one rate hike by the end of this year. The outlook, in turn, will drive the USD demand and produce some meaningful trading opportunities around the USD/CAD pair.
In the meantime, rapidly changing inflation dynamics due to volatile energy prices back the case for a more hawkish US central bank. This, along with escalating US-Iran tensions, helps the USD to regain some positive traction following the previous day's post-FOMC decline. In fact, the US military launched fresh strikes against Iranian targets in response to surprise missile attacks on American forces based in the Middle East on Tuesday.
This comes on top of joint US-Saudi strikes against Iran-aligned terrorists in Iraq and raises the risk of a broader regional conflict. Moreover, reports suggest that Yemen’s Iran-backed Houthis are considering imposing fees on commercial ships sailing through the southern Red Sea. Adding to this, the US-Iran standoff over the Strait of Hormuz continues to fuel worries about significant disruptions to global energy supplies, supporting crude oil prices.
CAD struggles to attract any meaningful buyers amid the Bank of Canada's dovish bias and trade war fears. This, in turn, favors USD/CAD bulls, suggesting that any intraday corrective slide is likely to be bought into and remain limited.
Headlines
· The Fed kept its policy rate at 3.50%–3.75% for a fifth meeting in July 2026, with three voters dissenting in favour of a hike, leaving a September increase possible, if seen less likely than before the decision. The Fed reported solid growth, strong productivity and investment, stable unemployment, and inflation still above the 2% target, and reaffirmed its commitment to price stability. Kevin Warsh offered little guidance but said the Fed “will not hesitate to act” and that higher rates “could well be part of the solution” to curb excessive inflation. Long US treasury yields jumped back to the cycle highs as the Fed was seen less determined to get ahead of inflation concerns.
· US–Iran fighting threatened global energy supplies after an attack on US forces in Jordan prompted a strong response vow from President Trump. Talks stalled over Tehran’s insistence on control of the Strait of Hormuz, while the conflict spread to the Red Sea, where Iran-backed Houthis threatened a Saudi blockade and Riyadh joined US strikes on Iran-linked targets in Iraq.
· The 30-year fixed US mortgage rate rose 7 bps to 6.76% in the week ending July 24, 2026, the highest since August 2025, amid higher Treasury yields (including a 19-year high in the benchmark US 30-year treasury yield) and persistent inflation fears tied partly to Middle East tensions. Rates are up about 70 bps since late February, reinforcing “higher for longer” Fed expectations. Higher costs are cooling housing demand: total applications fell 6.4%, with purchases down 3.6% and refinancings down 9.9%.
Key Points
· Macro: Fed keeps rate unchanged, with three hawkish dissenters. US long-dated treasury yields jump in reaction.
· Equities: Global equities weakened as the Federal Reserve unsettled Wall Street, Europe digested earnings, and Asia grappled with another semiconductor-led selloff
· Volatility: Fed hold and fresh Iran strikes push the Nasdaq into correction as vol jumps.
· Digital Assets: Crypto spot holds steady while miners are hammered and Morgan Stanley launches altcoin ETPs.
· Commodities: Gold choppy post-FOMC, ends back lower. Crude oil maintains recent rally on fresh US-Iran hostilities and on concerns of wider conflict.
· Fixed Income: US yield curve steepens post-FOMC, US 30-year yield hits 19-year high
· Currencies: US dollar weaker post-FOMC, particularly against the euro.