Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3980-1.4230
Euro 1.6070-1.6320
Sterling 1.8560-1.8810
WTI Oil (opening level) $75.34
The CAD/USD is opening at 1.4107 ( 0.7089 )
The US dollar jumped sharply higher on the boost to short US interest rates after the FOMC meeting policy statement removed its “easing bias” and new Fed Chair waxed hawkish on fighting inflation at the press conference, even as he refused to comment on the Fed’s next move.
USD/CAD maintains a firm bullish bias as price holds well above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, suggesting a sustained breakout phase rather than a mere mean-reversion spike. The Relative Strength Index (14) near 83 signals deeply overbought conditions that hint at risk of a corrective pullback even within the prevailing uptrend.
On the downside, initial support emerges at the former Bollinger upper band area around 1.4100, ahead of the Bollinger middle band clustered near 1.3913, where a dip would still keep the broader bullish structure intact. A deeper retracement would expose the 100-day SMA around 1.3747 and the lower Bollinger band near 1.3726 as subsequent demand zones, with buyers likely to defend these levels to preserve the current upward bias as long as they remain intact.
Headlines
· The Fed held rates steady at Kevin Warsh’s first meeting but surprised hawkishly: 9 of 19 officials now see at least one hike this year, up from none in March, and Warsh scrapped traditional forward guidance while pledging to restore price stability. Short US yields backed up sharply as rate hike odds as soon as October were more fully priced in, even as the reaction at the longer end of the US yield curve was muted, with 30-year yields actually falling – meaning a sharp flattening of the US yield curve.
· The Fed lifted its 2026 PCE forecast to 3.6% and core PCE to 3.3% from 2.7% for both previously . Chair Warsh also launched five task forces to review and potentially overhaul Fed communications framework, the size of the Fed’s balance sheet, and other issues.
· Many banks raised their forecasts FOMC policy rate, while Citi pushed its call for a first rate cut to October. The 2026 median Fed funds rate forecast rose to 3.8% from 3.4% in March, and for 2027, rose to 3.6% from 3.1%, but Fed Chair Warsh did not provide a forecast for the dot plot.
· UK May Payrolled Monthly Employees Change rose 2k vs. -23k expected and the April data saw a +47k positive revision from -100k to -53k. The May Claimant Count rose to 4.5% from 4.4% in April while the slower ILO Unemployment Survey – only reporting data through April today – reported that the Unemployment drop fell to 4.9% versus 5.0% expected and 5.0% in March.
· Trump signed an interim agreement aimed at ending the conflict with Iran and reopening the Strait of Hormuz. The memorandum has drawn criticism from some Republicans, who argue that the US is offering significant concessions. The deal launches a 60-day negotiating process on Iran’s nuclear program, provides a pathway for sanctions relief and access to certain frozen Iranian assets, and is expected to support the gradual reopening of regional energy trade routes. The agreement does not require Iran to immediately abandon all uranium enrichment activities or its ballistic missile program, both of which remain subjects for further negotiations.
· US retail sales rose 0.9% m/m in May 2026, beating forecasts (0.5%) and April’s revised 0.4%, signalling a consumption bounce back. Ex-gas, sales climbed 0.7% with broad-based strength across online, autos, and discretionary categories; restaurants/bars and electronics/appliances declined. The core “control group” for GDP also rose 0.7%, after 0.5% in April.
· US pending home sales rose 3.8% m/m in May 2026, the largest gain since September 2024 and well above the 0.8% forecast. All regions saw increases, and sales were up 4.8% y/y. NAR’s Lawrence Yun said the jump reflects pent-up demand and growing acceptance of >6% mortgage rates, while stressing the need for more housing supply.
Key Points
· Equities: US fell after a hawkish Fed, Europe hit records, while Asia rose before facing weaker futures.
· Volatility: Hawkish Fed, VIX elevated, US-Iran deal supports sentiment
· Digital Assets: Bitcoin and Ethereum weaker, altcoins lower, defensive options flow, institutions remain cautious
· Commodities: Crude tumbles as Hormuz reopening nears; gold hit by Fed, lifted by Trump
· Fixed Income: Pronounced US Treasury yield curve flattening after FOMC as short yields jump and longest yields fell.
· Currencies: USD jumps on heightened rate hike anticipation, though USDJPY saw less reaction than other USD majors.