Forex News

• USD/CAD extended its rebound off the spring lows even as Canada logged its widest trade surplus in four years.
• The record surplus was built on a Crude Oil price spike that has since reversed, stripping away the Loonie's export support.
• Friday's Canadian employment report is expected to show hiring slowing sharply from May's pace.

Canada delivered the kind of trade headline that should have put a firm bid under the Loonie, and the currency barely noticed. Statistics Canada reported the merchandise trade surplus widened to $4.2 billion in May, a four-year high built on record exports worth $77.1 billion, yet the Canadian Dollar drifted lower on the session as USD/CAD held its ground near the 1.4200 handle.

A surplus with an expiry date

The disconnect makes sense the moment you look at what actually built the surplus. May's export run was the fourth straight monthly gain, but it was a price story rather than a volume story, and the price doing the heavy lifting was Crude Oil, which has since surrendered most of the war premium that inflated those shipment values.

In real, price-adjusted terms, exports were essentially flat on the month, and one bank desk was blunt enough to flag the print as the likely high watermark for the surplus rather than the start of a trend.

Crude Oil unwinds the war premium

The energy tailwind that flattered those export values is not just softening but actively reversing. West Texas Intermediate (WTI), the North American benchmark, has slid back toward the $70 mark, near its lowest levels since February, as vessel traffic through the Strait of Hormuz keeps normalizing and the war premium continues to drain away.

Supply is now the dominant force, with major exporters signing off on another output increase for next month and Saudi Arabia cutting its flagship export grade to Asian buyers by the widest margin since the price wars of the last decade. Sporadic shipping incidents can still hand Crude Oil a day of gains, but the structural pull is lower, and a producer does not discount that aggressively into strong demand.

The one number worth respecting

Underneath the commodity noise sits a data point that actually looks forward. Imports of industrial machinery and equipment jumped 6.1% in May and are running almost 13% higher YoY, and that is the category that tends to lead business investment rather than trail it.

Firms do not order machinery when they expect to shrink, so the signal is that Canadian capital spending is edging higher even with trade policy still murky. It is a real positive, but a modest one, and it does nothing to replace the export income that a receding Crude Oil price is quietly pulling back.

The hawkish case springs a leak

The same Crude Oil slide that is deflating the trade surplus is quietly draining the case for higher Canadian rates. The Bank of Canada (BoC) has held its policy rate at 2.25% for five straight meetings, wedged between a soft domestic economy and the inflation risk that elevated energy prices kept alive, and money markets had even flirted with a small chance of a hike at the July 15 decision.

That case springs a leak once Crude Oil slips below the assumptions the Bank leaned on for its spring forecast, which is exactly where prices now sit. Tuesday's Ivey Purchasing Managers Index (PMI) undershooting expectations only sharpened the sense that domestic momentum is fading, not building.

Friday puts the labour market on the stand

The calendar hands the Loonie its next real test on Friday. Canada's June employment report lands at 12:30 GMT, with consensus looking for hiring to cool to roughly 10K jobs after May's near-88K surge and the unemployment rate expected to hold around 6.6%.

A soft print would harden the message the trade data already whispers, that domestic demand cannot lean on an export boost that Crude Oil is busy taking away. The Federal Open Market Committee (FOMC) minutes on Wednesday give the US Dollar its own catalyst, but for USD/CAD direction this week, the jobs number is the one that counts.

Where the tape breaks

Resistance: The first ceiling sits at the recent swing high near 1.4250, the level that has capped the rebound off the spring low. A daily close above it opens a clean run at the 1.4300 handle, with little in the way until then.

Support: The first floor forms around 1.4150, then at the 1.4000 handle, which lines up with the rising 50-period Exponential Moving Average (EMA). Deeper support rests close to 1.3850 at the 200 EMA, a level USD/CAD reclaimed on the way up and would need to lose to call the trend into question.

Bias: Higher. USD/CAD is trading above both moving averages with momentum still pointed up, and the fundamental props under the Loonie are fading rather than firming. The Stochastic Relative Strength Index (Stoch RSI) rolling over from overbought argues for a pause rather than a reversal, and dips toward 1.4150 look like buying opportunities while that level holds.

USD/CAD daily chart

Commerzbank’s Charlie Lay highlights that USD/SGD has been stable around 1.2920, with SGD NEER estimated at roughly +0.8% above its mid-point. The pair has traded within a 1.29–1.30 range for a month and Lay expects near-term consolidation. The +/-2% NEER band implies a broader USD/SGD range between 1.2780 and 1.3300.

SGD NEER stays moderately elevated

"In FX, USD/SGD was stable yesterday at around 1.2920. It has held within the 1.29-1.30 range for the past month, and we look for consolidation in the near term. On a SGD NEER basis, we estimate it is around +0.8% above the mid-point for USD/SGD at 1.2920, USD/MYR at 4.0850, and USD/CNY at 6.7940. The +/-2% band around the mid-point corresponds to USD/SGD between 1.2780-1.3300, with the mid-point at 1.3040, ceteris paribus."

"May retail sales rose 3% yoy (Bloomberg consensus: 4.7%) vs 5.4% previously. On a 3-month moving average (3mma) basis, growth moderated to 4.3% yoy from a firm 6.2% in April. Excluding autos, it eased to 3.7% from 4.5% previously and on a 3mma basis, growth slowed to 3.7% vs 6.3% previously."

"The data still pointed to a continued expansion, supported by a healthy labour market. Consumer demand is expected to remain resilient and complement the strong external sector, which continues to benefit from AI-related exports."

"The next key release will be the advance Q2 GDP report which is due sometime next week. It is expected to remain firm at around 5.6% yoy vs 6.0% in Q1. The manufacturing sector is expected to be a driver, aided by electronics production. Industrial output expanded by 14.8% yoy in April-May compared to the same period last year vs 8% in Q1."

"This would imply around 5.8% expansion in H1 2026. We could see the government revise up the official forecast of 2-4% for this year when the final Q2 GDP is released around mid-August."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CAD eases as higher Oil prices lend support to the Canadian Dollar.
• Diverging Fed and BoC monetary policy expectations limit the Loonie's upside.
• Technically, USD/CAD remains in a bullish trend above key moving averages.

USD/CAD edges lower on Tuesday even as the US Dollar (USD) holds firm, with the Canadian Dollar (CAD) drawing support from a modest rebound in crude Oil prices following renewed attacks on commercial vessels near the Strait of Hormuz. At the time of writing, the pair is trading around 1.4188.

West Texas Intermediate (WTI) crude Oil is trading around $70.30, up nearly 2.50% on the day.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is treading water near 101.00.

However, diverging monetary policy expectations between the Federal Reserve (Fed) and the Bank of Canada (BoC) could limit further gains in the Canadian Dollar (CAD).

Markets continue to expect the Fed to raise interest rates later this year to bring inflation back to its 2% target, even as softer-than-expected US labor market data have reduced expectations of a near-term rate hike.

The BoC is widely expected to leave interest rates unchanged for the remainder of the year, while keeping the door open to rate cuts if inflation continues to ease.

Technically, the broader outlook remains bullish, with USD/CAD consolidating in a two-week range near levels last seen in April 2025.

Technical Analysis:

On the daily chart, USD/CAD holds well above the 100-day and 200-day Simple Moving Averages (SMAs), which reinforces a bullish near-term bias. Price is also holding over prior horizontal support at 1.4000 and the more immediate floor at 1.4150, keeping the pair well-supported despite a mild loss of momentum signaled by the Relative Strength Index (RSI) easing from overbought territory near 68 and a softening Moving Average Convergence Divergence (MACD) line slipping modestly below zero.

On the downside, initial support is seen at 1.4150, with a stronger structural cushion at the 1.4000 horizontal level. Below these, the 200-day SMA at 1.3845 and the 100-day SMA at 1.3822 form a deeper demand zone that would likely underpin any more pronounced pullback while the broader bullish structure remains intact.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

UOB Global Economics & Markets Research economists Enrico Tanuwidjaja and Vincentius Ming Shen assess Indonesia’s fiscal metrics, noting a primary surplus in May despite rapid expenditure growth. They highlight strong tax-driven revenue supported by the Coretax system, elevated central government spending on social programs, and maintain a 2026 fiscal deficit forecast near 2.9% of Gross Domestic Product (GDP), with potential narrowing if tax reforms and spending cuts succeed.

Fiscal stance, deficit and financing risks

"Indonesia’s fiscal position improved in May, with the primary balance returning to a surplus of IDR58.6tn."

"As a result, the fiscal deficit widened slightly to 0.70% of GDP from 0.63% in April, although it remained well below the statutory ceiling of 3% of GDP, preserving ample fiscal policy flexibility."

"Looking ahead, prudent fiscal management remains essential."

"We maintain our fiscal deficit projection of approximately 2.9% of GDP for 2026, reflecting sustained government spending momentum."

"Nevertheless, the deficit could narrow should revenue-enhancing measures—particularly tax reforms—prove effective and expenditure rationalization measures, such as a reduction in the Free Nutritious Meals Program budget from IDR335tn to IDR268tn (and recent newsflow indicated that it could even materialize to under IDR200tn), be implemented successfully."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CHF ticked higher again on Tuesday, with the Swiss side of the calendar completely empty.
• The Franc's rebound off its 14-year low has been grudging, and haven demand keeps fading.
• The SNB sits pinned at zero and ready to intervene, capping Franc strength from above.

There is a certain honesty to a currency with nothing to say for itself, and the Swiss Franc spent Tuesday doing exactly that. With not one Swiss data release on the calendar this week, the Franc has no story of its own, leaving USD/CHF to drift on whatever the Dollar side of the tape serves up. The pair ground fractionally higher, extending a 2026 recovery off April's 14-year low near 0.7750 that has been shallow and wholly borrowed from abroad.

Borrowed direction from the Fed

The only real pulse in USD/CHF this week comes from across the Atlantic. The Federal Reserve (Fed) has spent a month convincing markets it is likelier to hike than cut: June's hold was a fourth straight, but the projections dropped the old easing bias and left half the committee pencilling in a 2026 hike, keeping the Dollar firm.

The awkward part for Dollar bulls is that the data has begun to undercut the rhetoric. Softer US labour readings have trimmed the odds of another hike, and CME FedWatch now prices the July 29 meeting as a hold with better than seven-in-ten confidence, up from nearer three-in-five a fortnight ago. Fed speakers dot the week, tested against a cooling jobs picture.

A haven that keeps leaking

Whatever the Franc cannot earn from Swiss fundamentals it usually collects in a crisis, and here too the picture has turned. The safe-haven premium that poured in during the Middle East conflict has drained since the guns fell quiet, leaving the Franc close to five percent weaker than before the fighting. Renewed regional flare-ups buy only a brief bid that fades fast.

More damaging is that when investors did reach for shelter this year, they bought Dollars, not Francs. The Fed's hawkish tilt handed the Dollar a yield edge the Franc, stuck at a zero policy rate, cannot match, and a haven paying nothing loses to one paying three and a half percent. The Franc's reputation is intact; its monopoly is not.

The SNB's thumb on the scale

Standing over all of this is a central bank that would rather the Franc did not rally at all. The Swiss National Bank (SNB) has held at zero for a fourth straight meeting and says plainly it will sell Francs whenever the currency threatens to appreciate too far, guidance traders ignore at their peril. With Swiss Consumer Price Index (CPI) inflation down to 0.5% in June and the International Monetary Fund (IMF) flagging eventual rate cuts, nothing domestic pushes the other way.

The result is a Franc squeezed from both sides: nothing in the data lets it strengthen, and the moment it tries, the SNB leans against it. For USD/CHF the downside is quietly defended even when the Dollar goes nowhere, which is much of why the pair keeps drifting higher on days when nothing should be happening.

What the minutes might stir

The one scheduled event with the power to move USD/CHF this week is not Swiss at all. The minutes of the June Federal Open Market Committee (FOMC) meeting land Wednesday at 18:00 GMT, and with the hawkish turn sitting awkwardly against softer jobs data, traders will read them for how real the appetite for a 2026 hike is. A hawkish record lifts the Dollar and presses the Franc lower; a softer one takes the pressure off. US jobless claims Thursday are the only other release worth watching.

Levels to watch

Resistance: The 0.8100 handle is the first hurdle, where the pair has stalled repeatedly through late June and again this week. Above it, the June high near 0.8150 caps the entire 2026 recovery, and a close through there is the first real sign the Franc's grudging slide has further to run.

Support: The 0.8050 area is the nearest floor, with the 0.8000 handle the more important shelf below. The rising 50-day and 200-day Exponential Moving Averages (EMA) now sit stacked just under 0.8000, the line between a shallow pullback and a genuine Franc recovery.

Bias: The path of least resistance stays higher, if grudgingly, with a hawkish Fed and a central bank defending the Franc's downside both arguing for USD/CHF to grind toward 0.8100 while it holds 0.8000. An intraday Stochastic Relative Strength Index (Stoch RSI) already overbought argues the next leg waits for a shallow dip, and a decisive break below 0.8000, most likely on a haven scare or dovish minutes, would mark the Franc finally finding a reason of its own to rally.

USD/CHF daily chart

• DJIA touched a fresh intraday record before reversing to close lower on Tuesday.
• A rotation out of AI and semiconductor names dragged the index off its highs.
• A jump in Crude Oil prices after a Strait of Hormuz attack added to the risk-off tone.

The Dow Jones Industrial Average spent Tuesday arriving late to a party the rest of the market had already begun to leave. The index tagged a fresh intraday record near 53,300 at the New York open around 13:30 GMT, then handed the gains straight back as a rotation out of artificial intelligence (AI) and semiconductor names swept the tape. By the close it had shed more than 500 points from that high, finishing near 52,850 and down about 0.35%, which on Tuesday counted as resilience.

The awkward part is that the record barely outlasted the opening auction, and it survived at all only because of the same stodgy, tech-light makeup that has made the index this year's laggard. The Nasdaq Composite lost more than 1% and the S&P 500 roughly half that, while the Dow's heavier weighting in healthcare, financials and consumer staples did exactly what it is built to do when the fashionable trade breaks.

The chip trade cracked in Asia and travelled west

None of this started on Wall Street; it simply arrived there. South Korea's Kospi fell almost 5% overnight after Samsung slid close to 7%, its record quarterly profit buried beneath fresh worry about spending and chip demand. European technology stocks then shed more than 3%, so US chips opened already carrying two sessions of selling. Micron dropped around 6% and the wider complex fell more than 5%, pulling the Dow's few technology names down with it.

DeepSeek reopens the oldest fear in the trade

Adding to the discomfort, reports that China's DeepSeek is building its own inference chip revived the fear that has always sat beneath the rally, that the sector's biggest customers are quietly designing their own way out. Nvidia slid more than 1%, and the speed of the reaction showed how crowded and one-directional the trade had become.

Crude Oil reopens a file the market had closed

Layered on top of the equity rotation, Crude Oil pushed higher after Iran struck a Qatari liquefied natural gas tanker near the Strait of Hormuz, the chokepoint through which close to a fifth of the world's Crude Oil moves. Brent traded above $73 and West Texas Intermediate (WTI) above $70, both up more than 2%. The market had quietly filed the conflict under resolved; one tanker attack was enough to remind it the US-Iran peace is still only interim.

The money went somewhere less exciting

The cash did not simply leave the AI trade; it went hunting for the parts of the market everyone had been ignoring. Eli Lilly gained about 3%, with JPMorgan and Microsoft also advancing and Walmart up more than 1% after cutting prices on staples such as ground beef and Coca-Cola. That defensive tilt cushioned the Dow, but research desks warn the second-quarter earnings bar now sits uncomfortably high, so the gap between healthy rotation and the first real crack may come down to how the coming results land.

The week still belongs to the minutes

Wednesday brings the Federal Open Market Committee (FOMC) minutes at 18:00 GMT. After a run of hawkish official commentary, including one voting member who leaned notably hawkish on Monday, the market will comb them for any sign the pause has a firm floor beneath it. Weekly initial jobless claims follow Thursday at 12:30 GMT, with the consensus near 218K against 215K prior. Hawkish minutes on stretched valuations and a wobbling AI trade is not the backdrop bulls would have chosen.

Levels to watch

Resistance: The record zone near 53,300 now caps the tape. Rallies into that band are likely to be sold until the semiconductor complex steadies. A daily close back above there reopens room toward 53,500.

Support: The reversal low near 52,750 is the first line to watch. A break there exposes 52,500 and then 52,000. The 50-day Exponential Moving Average (EMA) sits far below near 51,000, keeping this a pullback within an uptrend unless price loses the low 52,000s. The daily Stochastic Relative Strength Index (Stoch RSI) sat near the top of its range as the record printed, so some unwind was overdue.

Bias: Lower in the near term. The trend structure is still higher and the Dow's defensive tilt hands it a cushion the Nasdaq lacks, but a record that could not outlast the opening bell, an overnight semiconductor unwind and Crude Oil back on the geopolitical radar argue for chop and downside rather than fresh highs until the AI trade proves Tuesday was noise, not a turn.

Dow Jones daily chart

• The New Zealand Dollar weakens against the US Dollar ahead of the Reserve Bank of New Zealand's policy decision.
• Renewed geopolitical tensions in the Strait of Hormuz boost demand for the US Dollar.
• Markets expect the RBNZ to deliver a 25-basis-point rate hike but remain skeptical about further policy tightening.

NZD/USD trades around 0.5685 at the time of writing on Tuesday, down 0.26% on the day. The pair remains under pressure as the US Dollar (USD) attracts renewed demand following fresh geopolitical tensions in the Middle East, while investors await the Reserve Bank of New Zealand's (RBNZ) monetary policy decision.

According to Bloomberg, citing a US official, Iran fired at least two missiles at commercial vessels transiting the Strait of Hormuz late Monday. Two ships sustained significant damage without any reported casualties, while the UK Maritime Trade Operations also confirmed that a tanker was struck by an unidentified projectile. The escalation in tensions has supported safe-haven flows and strengthened the US Dollar.

Meanwhile, expectations for Federal Reserve (Fed) monetary policy continue to evolve following the recent slowdown in the US labor market. Investors now expect the Fed to keep interest rates unchanged at its July and September meetings, while lower Oil prices, driven by an output increase from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) and the US-Iran peace agreement, continue to ease inflationary pressures.

Attention now turns to the Reserve Bank of New Zealand's (RBNZ) policy decision due on Wednesday. ING expects the central bank to deliver a 25-basis-point rate hike, taking the Official Cash Rate to 2.5%, describing the move as an "insurance" hike. However, the bank believes the increase could prove to be a one-off move, limiting its positive impact on the New Zealand Dollar (NZD).

Several institutions share this cautious view. Commerzbank believes a rate hike could provide initial support to the Kiwi but argues that markets are already pricing in around 3.5 rate hikes over the next 12 months, a scenario it considers overly optimistic. Rabobank also believes that tightening expectations have become too aggressive and warns that a repricing of those expectations could weigh on the currency in the coming months. Meanwhile, BBH expects a 25-basis-point rate hike as well but argues that any NZD strength is likely to be short-lived before markets shift their focus to the central bank's forward guidance.

Commerzbank’s Dr. Ralph Solveen notes that German industrial output rose 0.9% in May versus April, leaving April–May production slightly above the first-quarter average. With manufacturing sales outperforming output and energy prices having spiked only temporarily, he argues there is a growing likelihood that the German economy avoided contraction in spring and could resume recovery later in 2026 as Oil prices fall.

German industry shows tentative improvement

"Industrial output rose by 0.9% in May compared with the previous month. As a result, output in April and May was slightly above the Q1 average. Since sales have performed even slightly better, there is a growing likelihood that the German economy did not contract in the spring, despite the massive temporary spike in energy prices."

"Once again, German industry has reported quite encouraging figures: Following yesterday’s report of a significant increase in industrial orders, industrial output in May was also higher than in April, even though the 0.9% increase was slightly smaller than that seen in orders. However, this is not yet enough to suggest that the sideways trend in production has come to an end."

"After all, production in April and May was, on average, 0.5% higher than in the first quarter. In addition, manufacturing output – that is, production excluding construction and energy production – performed significantly better than production in this sector. Thus, the currently available figures certainly offer hope that the German economy did not contract in the second quarter, despite the massive rise in energy prices due to the war in Iran and the increased uncertainty."

"In the second half of the year, it is likely to resume its recovery in light of the recent sharp drop in oil prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• WTI climbs over 2.5% on Tuesday as renewed attacks near the Strait of Hormuz revive supply concerns.
• Three tankers were hit near the key shipping route over the past 24 hours.
• Technically, WTI retains a bearish bias despite improving momentum indicators.

West Texas Intermediate (WTI) crude Oil edges higher on Tuesday as fresh attacks near the Strait of Hormuz threaten the recovery in shipping seen in recent weeks following the interim US-Iran peace deal. At the time of writing, WTI is trading around $70.44, up about 2.65% on the day.

Iran has repeatedly stated that only vessels using its approved route through the Strait of Hormuz are considered safe and must coordinate with the Islamic Revolutionary Guard Corps (IRGC).

Three tankers were hit in the Strait of Hormuz over the past 24 hours, according to the United Kingdom Maritime Trade Operations (UKMTO). The incidents have revived some of the geopolitical risk premium in the Oil market.

Traders now turn their attention to Wednesday's US Energy Information Administration (EIA) weekly inventory report. US crude inventories have fallen for ten straight weeks, pointing to a tight supply outlook despite improving shipping through the Strait of Hormuz.

Technical Analysis:

On the daily chart, WTI US Oil maintains a bearish near-term bias as it holds below the 200-day Simple Moving Average (SMA) near $73 and well under the 100-day SMA around $86.

The recent bounce from sub-$69 levels has lifted the Relative Strength Index (RSI) toward a neutral 35 zone, while the Moving Average Convergence Divergence (MACD) has crossed marginally above zero, which hints at fading downside momentum but not yet a bullish reversal while price remains capped by these higher averages.

On the topside, initial resistance is located at the 200-day SMA at $73, ahead of the prior horizontal ceiling near $80, with the 100-day SMA at $86 reinforcing a broader medium-term supply area.

On the downside, immediate support is seen at the horizontal level at $67.00, with a deeper bearish extension exposing the next structural floor around $60.00.

(The technical analysis of this story was written with the help of an AI tool. Know more.)