USD/CAD Market Update

USD/CAD Slides to 1.3814 – Thursday, April 09, 2026

USD/CAD Market Snapshot	Current	24 Hr Chg	30 Day Avg/Range
Spot Rate	1.3814	-0.0036	1.3836
Daily Range	1.3817 – 1.3861	—	1.3669 – 1.3968

# KEY TAKEAWAY USD/CAD slides to 1.3814 as ceasefire fragility emerges with mutual accusations of violations, while soft U.S. consumer spending and elevated inflation create a stagflation backdrop that complicates the Fed's policy path ahead of critical inflation data on Friday. ---

Current Level: Low-1.38s (24hr range 1.3817–1.3861)

USD/CAD has declined 36 pips to 1.3814 this morning as the initial relief from yesterday's ceasefire announcement gives way to skepticism about the agreement's durability. Tehran has accused Israel of violating the ceasefire through strikes in Lebanon, while the Strait of Hormuz remains effectively closed despite claims of reopening. The pair is consolidating near recent lows as markets digest weak U.S. consumer data and elevated inflation readings that suggest economic momentum is slowing even as price pressures persist.

Market Overview:

Risk sentiment is mixed this morning as traders reassess the ceasefire's credibility. Equity markets are opening slightly lower after yesterday's sharp rally, suggesting that initial optimism has faded. The U.S. dollar is trading lower against the G10 basket following yesterday's relief move, but momentum is stalling as evidence of ceasefire violations emerges. Oil prices have stabilized near 95 dollars per barrel after yesterday's sharp decline, reflecting uncertainty about whether the Strait of Hormuz will genuinely reopen for normal commercial traffic. Bond yields remain elevated as inflation concerns persist despite the geopolitical de-escalation narrative.

Ceasefire Fragility Undermines Risk-On Momentum:

The ceasefire agreement announced yesterday is showing immediate signs of strain. Tehran has stated that Israel has violated the agreement through continued strikes in Lebanon, while Israeli officials claim Lebanon was not included in the ceasefire framework. Vice President JD Vance described the disagreement as a miscommunication. The Strait of Hormuz remains effectively closed, with Iran stating it will permit no more than 15 vessels per day to pass under the ceasefire agreement, far below pre-conflict levels and well short of a "free and open" waterway.

U.S. military assets remain deployed in and around Iran pending full compliance with the agreement. JD Vance is scheduled to lead U.S.-Iran talks in Islamabad this weekend, marking the first substantive negotiations since the ceasefire announcement. Markets are treating the agreement as fragile and headline-dependent, with the outcome of this weekend's talks likely to determine whether yesterday's relief rally can be sustained or whether escalation risks re-emerge. The fact that both sides are already accusing each other of violations suggests that the underlying disagreements remain substantial and unresolved.

U.S. Consumer Spending Weakens Amid Elevated Inflation:

Recent U.S. economic data reveals a concerning combination of soft demand and persistent price pressures. Real consumer spending rose only 0.1 percent in February, falling short of expectations, with January's figure revised downward to zero growth. Personal incomes declined 0.1 percent versus a forecast of plus 0.3 percent, while the household savings rate dropped from 4.5 percent to 4.0 percent, suggesting consumers have less financial cushion to absorb higher energy costs.

Core PCE inflation, the Federal Reserve's preferred inflation measure, remained elevated at a 3.0 percent annualized pace. This combination of weak consumer spending and elevated inflation creates a stagflation dynamic that complicates the Fed's policy calculus. Consumers are losing momentum, with discretionary spending at risk from higher gasoline prices. The data suggests that the economy may be facing a period of weak growth coupled with persistent inflation, a scenario that would argue for rate cuts eventually but not immediately. This uncertainty is weighing on the U.S. dollar as markets struggle to determine the Fed's appropriate policy response.

Canadian Data/Outlook:

No major Canadian economic data was released this morning. The Bank of Canada is expected to hold its overnight rate at 2.25 percent at the April 29 meeting. Canadian employment data is scheduled for release tomorrow, with markets expecting employment to rebound to 14,500 new jobs after last month's decline of 83,900. The unemployment rate is forecast to rise to 6.8 percent from 6.7 percent, suggesting that while job creation may recover, the overall labor market remains soft. The Bank of Canada's cautious policy stance, which emphasizes looking through temporary energy-driven inflation spikes, continues to weigh on the Canadian dollar relative to peers that may benefit more directly from improved global risk sentiment.

Fed Watch:

The Federal Reserve is expected to hold rates at 3.75 percent at its April 29 meeting. Markets currently assign minimal probability to rate cuts in 2026, with the weak consumer spending data and elevated inflation readings reinforcing the case for patience. The Fed released its meeting minutes yesterday, providing insight into how policymakers are assessing the geopolitical situation and its implications for inflation and growth. The ceasefire removes the immediate tail risk of further oil-price spikes, which may ease concerns about a prolonged supply-shock inflation cycle. However, the Fed will likely want to see sustained evidence of Strait normalization and lower oil prices before meaningfully repricing rate cut expectations higher. Friday's comprehensive inflation report, including CPI data forecast at 3.4 percent year-over-year versus 2.4 percent previously, will be critical for determining whether the Fed can shift toward a more dovish stance.

Technical Picture:

Resistance: 1.3932 (strong congestive resistance level that has held for the fourth consecutive failed test since early January; break above would target 1.3985 and 1.4051), 1.3985 (secondary resistance)
Support: 1.3860 (trendline support; a close below this level would neutralize recent bullish breakouts and shift focus to the February-March triple top at 1.3728), 1.3617 (key support; a close below would terminate the broader corrective rally underway since late January)
Outlook: USD/CAD is attempting to recover from recent lows but remains below the critical trendline support at 1.3860. The pair's inability to sustain yesterday's relief rally suggests that underlying concerns about ceasefire durability and U.S. economic weakness are limiting upside momentum. A daily close below 1.3860 would neutralize recent bullish breakouts and expose the triple top level near 1.3728. To the upside, a break above 1.3932 is required to generate renewed bullish momentum, though the fourth consecutive failed test of this level suggests significant selling interest at this threshold.

Week Ahead:

Date	Event
Thu, Apr 09	USD Core PCE Price Index m/m [HIGH] - Forecast 0.4% vs. Previous 0.4%
Thu, Apr 09	USD Final GDP q/q [HIGH] - Forecast 0.7% vs. Previous 0.7%
Fri, Apr 10	CAD Unemployment Rate [HIGH] - Forecast 6.8% vs. Previous 6.7%
Fri, Apr 10	CAD Employment Change [HIGH] - Forecast 14.5K vs. Previous -83.9K
Fri, Apr 10	USD CPI y/y [HIGH] - Forecast 3.4% vs. Previous 2.4%
Fri, Apr 10	USD Core CPI m/m [HIGH] - Forecast 0.3% vs. Previous 0.2%
Fri, Apr 10	USD CPI m/m [HIGH] - Forecast 1.0% vs. Previous 0.3%
Tue, Apr 14	USD PPI m/m [HIGH] - Previous 0.7%
Tue, Apr 14	USD Core PPI m/m [HIGH] - Previous 0.5%

This week features a critical slate of economic data that will test inflation dynamics and labor market resilience in the context of the ceasefire. Today's Core PCE inflation data is expected to hold steady at 0.4 percent month-over-month, while Friday's comprehensive inflation report is anticipated to show a notable jump in annual CPI to 3.4 percent from 2.4 percent, though this reflects the impact of elevated energy prices from the conflict period. Canadian employment data on Friday will be closely watched, with markets expecting a significant rebound to 14,500 new jobs after last month's decline of 83,900. The unemployment rate is forecast to rise to 6.8 percent, suggesting that while job creation may rebound, the overall labor market remains soft. The key question for USD/CAD will be whether the ceasefire removes enough inflation risk to support a more dovish Fed repricing, or whether the data continues to support a hold stance. Tuesday's producer price data will provide additional insight into whether inflation pressures are broadening beyond consumer-facing categories.

Other Notes:

• China's largest electric vehicle manufacturer, BYD, is planning to open 20 dealerships across Canada through local partners following Canada's recent decision to lift prohibitive tariffs on Chinese EVs and establish an annual import quota of 49,000 vehicles. BYD has also indicated interest in building a Canadian factory, though the regulatory environment remains uncertain. Canada's Industry Minister recently rejected a Stellantis proposal to assemble EVs using kits shipped from China, emphasizing that auto assembly must support domestic supply chains. This development signals evolving trade dynamics between Canada and China that could influence longer-term currency flows and capital allocation.
• Oil prices have stabilized near 95 dollars per barrel after yesterday's sharp 16 percent decline. The sustainability of lower oil prices depends on whether diplomatic progress translates into actual improvements in shipping flows through the Strait of Hormuz. Until evidence emerges that commercial shipping is returning to normal and war-risk premiums are genuinely receding, the sustainability of lower oil prices remains uncertain. The Canadian dollar's muted performance despite elevated crude prices reflects the fact that falling oil prices provide less support than rising prices, and domestic Canadian fundamentals remain weak.
• The euro has surged above 1.17 following the ceasefire, with EUR/USD jumping more than 1.5 percent this week. The drivers are straightforward: the dollar's haven demand has evaporated while its terms-of-trade advantage has weakened following the collapse in crude prices. Europe, as one of the most exposed regions to the Hormuz shock, is seeing an immediate easing of its energy risk premium. The question now is whether the euro can sustain a break above 1.17, as the ceasefire removes immediate downside tail risk but does not resolve Europe's structural vulnerabilities.
• Sterling has surged more than 1 percent versus the dollar to trade back above 1.34 on the ceasefire news. The pound's jump reflects a rapid unwinding of safe-haven dollar demand and a sharp reversal in the geopolitical risk premium. Only last week, traders were pricing almost three Bank of England hikes for 2026 as energy-driven inflation fears intensified. That has now collapsed to just one hike, as the ceasefire removes the tail-risk of further oil-price spikes and eases concerns about a prolonged supply-shock inflation cycle.

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This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions. Vantry Capital Inc.