USD/CAD Market Update

Current Level: Low-1.36s (24hr range 1.3604 to 1.3630)

USD/CAD is trading at 1.3611 this morning, essentially flat versus Monday's 1.3621 close and well inside RBC's 1.3575 to 1.3645 expected band. The intraday range has been a tight 1.3604 to 1.3630, the narrowest in roughly two weeks. Oil is pulling back from Monday's spike, with WTI down more than 3% to near $102.65 and Brent down roughly 1.4% to $112.90, as the US-Iran ceasefire holds despite Monday's skirmishes around the Strait of Hormuz. The flat tape is consistent with a market that has finished its Iran-driven repricing and is waiting on Friday's data.

Market Overview:

Risk appetite is firm. US equity futures point to a modest advance with the Nasdaq Composite holding above 25,000 after Monday's record close. The dollar is mixed against the G10 basket, supported at the margin by oil's pullback but capped by the broader risk-on tone. Global bond yields are drifting lower, with the US 30-year easing back toward but still above 5.00%. The combination of receding war-risk premium and sticky energy levels has produced a directionally quiet session for USD/CAD, with both the bull and bear cases waiting on Friday's labour-market evidence.

Ceasefire Holds as Project Freedom Stalls:

The April US-Iran ceasefire is holding after Monday's escalation, with Defense Secretary Pete Hegseth confirming the truce remains in place despite the previous day's exchanges around the Strait of Hormuz. Project Freedom, the US framework for guiding neutral vessels through the strait, has had a slow start. Per CNN, only four ships transited the strait on the operation's first day, against a pre-conflict daily average above 120, with mine risk, attack risk, and war-risk insurance constraints all weighing on traffic. Iran's contained response on Monday, drone and missile strikes on UAE infrastructure and skirmishes with US Navy units, was downplayed by US officials. The market read is that the ceasefire framework can absorb tactical exchanges without breaking, and that the energy supply story remains a slow grind toward normalization rather than a sharp resolution.

Friday Jobs Cluster Is the Binary Event:

Friday brings a joint release at 5:30 AM Pacific that will set the tone for the next two weeks of trading. US Non-Farm Payrolls consensus is for a sharp deceleration to 60K from the prior 178K, with the unemployment rate steady at 4.3% and Average Hourly Earnings at 0.3% month-over-month. Canadian Employment is forecast at a 5.1K headline gain against the prior 14.1K, with the unemployment rate steady at 6.7%. The setup is asymmetric for USD/CAD. A weak US print combined with a Canadian beat could press the pair toward the 1.3526 year-low quickly, while two soft prints would likely produce a muted move on offsetting forces. The CIBC desk view is that Friday is unlikely to alter the Bank of Canada's hold-through-2026 trajectory.

Canadian Data/Outlook:

Per CIBC's Central Bank Watch, money markets price a 10% probability of a 25 basis point hike at the June 10 Bank of Canada meeting and 0% probability of a cut. CIBC and RBC both forecast the overnight rate flat at 2.25% through Q4 2026. Canadian Q1 GDP is tracking at 1.7% annualised against the Bank of Canada's 1.5% MPR projection, with manufacturing leading on a rebound in auto production. The flash March print was flat, however, suggesting Q2 momentum has stalled. Today's domestic news flow is light. Friday's employment report is the next BoC-relevant data point, and a sharp downside surprise would be the only realistic catalyst for a near-term shift toward a hawkish-tilt or dovish-tilt repricing.

Fed Watch:

Today's data calendar carries two second-tier US releases that traders will read for incremental NFP signal. ISM Services PMI for April is forecast at 53.8 versus the prior 54.0, and JOLTS Job Openings for March are expected at 6.87M against 6.88M prior. Both releases land at 7:00 AM Pacific. Per CIBC's Central Bank Watch, money-market pricing for the June 17 FOMC meeting is at 0% for both hike and cut, consistent with a hold consensus. The longer-dated December 17 outlook is more contested. Today's bank notes do not refresh a December number directly, and CME FedWatch readings published in late April have been in a 30 to 35% range for one cut by year-end. The reading we publish would be sensitive to today's ISM and JOLTS prints and to Friday's payrolls; for now, the Fed Watch view is best framed as a hold-biased curve with a single cut still possible if the labour market softens materially.

Technical Picture:

Resistance: 1.3666 first (RBC's old support trendline, now resistance), then 1.3728 above (last week's post-FOMC high zone).
Support: 1.3526 first (this year's low cluster), then 1.3482 below, with 1.3420 (September 2024 low) the deeper target.
Outlook: RBC's technical desk views last Thursday's close below 1.3598 as a reasserted bearish breakout, with rallies to 1.3666 and 1.3728 to be sold. The flat tape today is consistent with that framework: the pair is consolidating between the broken trendline above and the year-low cluster below, waiting on Friday's data to choose direction.

Week Ahead:

Friday's coincident US and Canadian employment release is the dominant event. Wednesday's Ivey PMI is a secondary domestic check on the manufacturing momentum that drove the Q1 GDP beat. UK local elections Thursday are a tail risk for sterling and gilts, but spot GBP/USD vol remains restrained ahead of the vote.

Other Notes:

• RBA hiked 25 basis points to 4.35% on an 8-1 vote, the third hike of 2026, fully unwinding last year's easing cycle. Governor Bullock noted second-round effects from oil-driven inflation could justify further hikes, but framed the new rate as restrictive. AUD softened on the dovish press conference despite the hawkish vote split.
• The 30-year US Treasury is back above 5.00%, with long-end pressure reflecting both the energy-driven inflation premium and ongoing fiscal-supply concerns.
• Long-end UK gilt yields are at multi-decade highs ahead of Thursday's local elections, with 30-year yields at a 28-year peak as traders weigh both Bank of England tightening risk and political uncertainty.
• Per CIBC, equity markets continue to melt higher, with the Nasdaq Composite opening at another all-time high above 25,000 on strong corporate earnings and a lack of further geopolitical escalation.