USD/CAD Market Update

Current Level: Mid-1.36s (24hr range 1.3641–1.3664)

USD/CAD is trading at 1.3651 this morning, modestly firmer from Monday's 1.3645 close as traders weigh a ceasefire deadline set to expire Wednesday evening against a better-than-expected US retail sales print. The Strait of Hormuz remains effectively closed to commercial traffic despite the two-week truce, keeping a residual risk premium in energy markets and a cautious tone across the majors.

Market Overview:

Risk sentiment is mixed as equities open modestly higher on strong earnings and US data while investors position for the ceasefire expiry. Global bond yields are drifting higher on the US consumption print, with the 10-year Treasury yield up 2 basis points to 4.27% and the 2-year up more than 4 basis points to 3.76%. The US dollar is steady to firmer against the G10 basket, though trading ranges have contracted as positioning migrates toward neutral. WTI remains elevated as shipping through the Strait stays heavily restricted, with only 16 vessels transiting on Monday and roughly 230 loaded tankers reported waiting inside the Gulf.

Iran Ceasefire Deadline Approaches:

President Trump confirmed Monday that the two-week ceasefire with Iran is set to expire Wednesday evening and called an extension "highly unlikely" without a deal, while Iran rejected negotiations "under the shadow of threats." The International Maritime Organization reports roughly 20,000 mariners and 2,000 ships remain stranded in the Persian Gulf, underscoring that the Strait of Hormuz is not functionally open despite the truce. Abu Dhabi National Oil Company's chief executive stated the Strait is still not open as Iran continues to restrict and condition traffic. Key sticking points in the talks include the status of the Strait, Iran's nuclear enrichment program, access to roughly $6 billion in frozen assets, and the US seizure of an Iranian-flagged vessel over the weekend. Markets continue to operate on the base case that a durable agreement remains likely near term, but visibility around Hormuz has deteriorated and a rapid return to pre-conflict shipping flows is not assured.

US Retail Sales Beat Expectations:

March retail sales rose 1.7% month-over-month against expectations of 1.4%, marking the largest monthly increase in a year. Gains were broad-based across most categories, with a record rise in gasoline station sales reflecting higher pump prices and strong contributions from motor vehicles and furniture. More importantly, the control group, which excludes gas, autos, restaurants, and building materials and feeds directly into GDP calculations, accelerated at its fastest pace since August, rising 0.7% against a 0.2% forecast. CIBC's economists note the data underscore a stronger-than-expected US consumer and should support risk assets even as the full economic fallout from the Iran conflict has yet to be felt.

Canadian Data/Outlook:

The Bank of Canada's quarterly business and consumer surveys released Monday showed modest improvement in activity and hiring and investment intentions in the lead-up to the Iran conflict, with inflation expectations ticking up but firms generally anticipating margin compression rather than large price increases. Monday's softer-than-feared March CPI at 2.4% year-over-year, below the 2.6% consensus, reinforces the case for a patient Bank of Canada next Wednesday. Markets price roughly a 7% probability of a 25 basis point cut at the April 29 meeting, with the policy rate widely expected to remain at 2.25%.

Fed Watch:

Kevin Warsh's Senate Banking Committee confirmation hearing began this morning at 7am Pacific. In prepared remarks, Warsh affirmed that "monetary policy independence is essential" while stating he does not believe independence is "particularly threatened when elected officials state their views on interest rates," and that "the Fed must stay in its lane" rather than stray into fiscal or social policy. Senator Elizabeth Warren raised Warsh's appearance in publicly disclosed Epstein files, and Senator Thom Tillis has vowed to block the nomination until the administration drops its investigation of Chair Powell. Markets view any FX impact from the hearing as likely modest and short-lived. The Federal Reserve is expected to hold rates at 4.25% to 4.50% on April 29, and swap pricing points to roughly 50% odds of any Fed policy change by year-end, a sharp reduction from earlier in the year when two to three cuts were priced in.

Technical Picture:

Resistance: 1.3728 (top of RBC's expected trading range, near-term selling interest), 1.3799 (CIBC strategists continue to view rallies to this zone as selling opportunities)
Support: 1.3636 (trendline and pivot for the corrective rally since late January; a daily close below targets yearly lows), 1.3526 (yearly low target on a downside break)
Outlook: Friday's hammer pattern and stretched daily momentum readings argued for a corrective bounce, and price has stabilized in the mid-1.36s after selling off in 10 of the previous 11 sessions. The 1.3636 trendline is the key near-term pivot. A daily close below would flip the technical picture bearish, while failure to reclaim 1.3728 keeps the broader downtrend intact.

Week Ahead:

Wednesday's ceasefire expiry is the binary overnight event. Beyond that, a dense central bank week culminates April 29 with BoC and Fed back-to-back, both widely expected to hold. April 30 closes the window with BoE, ECB, and US advance GDP plus Core PCE, any of which can drive USD/CAD outside the current 1.36–1.38 range.

Other Notes:

• Apple announced that CEO Tim Cook will step down on September 1 after nearly 15 years, with SVP of Hardware Engineering John Ternus taking over. Cook transitions to executive chairman.
• The Trump administration will begin accepting refund requests this week for approximately $166 billion in tariffs collected under the International Emergency Economic Powers Act, following the Supreme Court's decision to strike down the Liberation Day tariffs. Roughly 330,000 importers are eligible; consumer refunds are not part of the program.
• UK Prime Minister Keir Starmer is facing calls to resign following the appointment of Peter Mandelson, who has been linked to Jeffrey Epstein, as UK ambassador to the US. Prediction markets expect the current leadership to remain in place ahead of May 7 local elections.