Usdcad falls 0.5% as mixed US economic data influences currency markets

USDCAD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.5%	-68.1 Pips
Week to-date	-0.64%	-88 Pips
June	-1.02%	-140 Pips

Upcoming key events (London Time)

Fri 03:00 PM USD Index of Consumer Sentiment

What happened lately

In May 2025, the U.S. economy witnessed a modest increase in its Producer Price Index (PPI), which rose by 0.1% after experiencing a significant decline of 0.5% in April. This uptick, though slight, indicates some recovery in the cost of production from the previous month. However, the year-on-year PPI slightly dropped to 2.6% from the revised 2.5%. Additionally, the PPI excluding food and energy sectors also showed an increase of 0.1% from a downward revised -0.2% in April, suggesting stabilization in producer costs excluding volatile components. Despite the slight improvements in PPI figures, the 12-month PPI excluding food and energy slipped to 3% from 3.2%. When it comes to consumer inflation, the CPI inflation rate edged slightly up to 2.4% from 2.3% in the previous month, though the monthly rate slumped to 0.1% from 0.2%. Meanwhile, consumer inflation excluding food and energy remained unchanged at 2.8% on a yearly basis, with a decrease in the monthly rate to 0.1% from 0.2%. The U.S. Monthly Treasury Budget Statement returned a significant deficit of $316, following a surplus of $258 in April, reflecting a substantial fiscal shortfall.

Concerning labor markets, the initial unemployment insurance claims remained stable at 248,000 for the week ending 07 June, indicating no immediate increase in joblessness. Overall, these mixed economic signals suggest a period of stabilization with underlying inflation pressures persisting but not escalating dramatically.

The recent movements in the economic indicators impacted the currency markets, with the USDCAD rate dropping by 0.5% to 1.36029. The slight improvement in key U.S. inflation metrics despite some negative fiscal data seemingly provided sufficient reassurance to investors, contributing to slight downward pressure on the USD relative to CAD. This indicates that the Canadian economy may be perceived as having stronger fundamentals or resilience, possibly due to expectations of a stable or improving economic environment relative to the U.S. Moreover, without significant pressure from rising producer prices or employment concerns, market participants might be adopting a cautious approach towards holding USD, particularly with high-impact consumer sentiment data release on the horizon.

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What can we expect from USDCAD today?

USDCAD on Thursday dropped -0.5% to 1.36029. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks bearish as the pair posted lower in Thursday trading session.

Looking ahead for the day, immediate support level is at S1 1.35735 with break below could see further selling pressure towards S2 at 1.35441. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.36753 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.35950 would indicate selling pressure.

For the week to-date, take note that USDCAD is bearish as the pair posted lower by -0.64%.

Key levels to watch out:

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