Usdcad drops as new york manufacturing index declines and key economic events loom

USDCAD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.12%	-16 Pips
Week to-date	-0.13%	-17 Pips
June	-1.25%	-172 Pips

Upcoming key events (London Time)

Tue 01:30 PM USD Monthly Retail Trade (1-mth)
Wed 04:30 PM CAD Bank of Canada’s Governor Tiff Macklem speech
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD FOMC Economic Projections
Wed 07:00 PM USD Interest Rate Projections

What happened lately

In the United States, the New York Empire State Manufacturing Index experienced a decline in June 2025, dropping to -16 points from May’s figure of -9.2 points as reported by the New York Fed. This decrease suggests a contraction in manufacturing activities within the state of New York, indicating potential economic weakness in this sector. The decline can be interpreted as a sign of reduced business activity, possibly due to weaker demand or supply chain issues, affecting the overall economic outlook for the region and potentially impacting broader economic sentiment.

Concerning the USA’s upcoming economic events, there are several crucial reports expected. On Tuesday at 1:30 PM, the USD Monthly Retail Trade (1-month) data will be released. This report reflects consumer spending trends and is a vital indicator of economic health. A stronger-than-expected reading might offset the negativity from the manufacturing index, whereas a disappointing result could add more pressure on the economic outlook. Additionally, on Wednesday, a series of significant events are set to unfold, including the USD Fed Interest Rate Decision and FOMC Economic Projections at 7:00 PM. These announcements will provide insights into future monetary policy moves by the Federal Reserve, and any deviation from expectations could lead to heightened market volatility.

In Canada, the Bank of Canada Governor, Tiff Macklem, is scheduled to deliver a speech on Wednesday at 4:30 PM. This event might provide insights into the central bank’s views on current economic conditions, inflation, and future rate adjustments. Such speeches can influence market perceptions and lead to fluctuations in Canadian dollar value depending on the tone adopted by the governor.

Considering the reported economic measures and upcoming key events, the USDCAD is likely to be impacted by varying degrees of market sentiment. The decline in the Empire State Manufacturing Index suggests a potential dampening of economic activity in the United States, which may apply downward pressure on the US dollar. However, upcoming events, particularly the Fed’s interest rate decision and economic projections, hold the potential to sway the pair’s trajectory substantially depending upon their outcomes. Should the Fed indicate a more aggressive stance on rates than anticipated, this could lead to a strengthening of the USD against the CAD. Conversely, dovish signals from either the US or Canadian central banks could result in USD depreciation against the CAD, potentially encouraging a drop in the USDCAD pair. Ultimately, the interplay between US economic signals and forthcoming monetary policy decisions will largely determine the pair’s movement.

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What can we expect from USDCAD today?

USDCAD on Monday dropped -0.12% to 1.35680. Price is below 9-Day EMA while Stochastic is rising in oversold zone.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.3533 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.36070 or trades above daily pivot 1.357. Break above could target R1 at 1.3605. While to the downside, we are looking at 1.3533 (S1) and daily low of 1.35350 as support levels. USDCAD need to break on either side to indicate a short-term bias. A close below 1.35350 would indicate selling pressure.

For the week to-date, take note that USDCAD is mixed as compared to the prior week.

Key levels to watch out:

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