USD/CAD Market Update

Current Level: Mid-1.37s (24hr range 1.3750 to 1.3779)

USD/CAD is trading at 1.3758 this morning after opening at 1.3750 and printing as high as 1.3779, with the intraday range 1.3750 to 1.3779. The pair has now spent seven consecutive sessions above the 1.3728 trendline confirmation flagged through last week's tape, with the move now extending toward CIBC's 200-day moving average reference at 1.3813. The session feels tactical rather than directional ahead of the 2pm Eastern FOMC minutes and Nvidia's after-the-close earnings, both of which carry meaningful tail risk in either direction.

Market Overview:

Risk appetite is firmer this morning. Per CIBC, equities have opened slightly higher and the multi-day run-up in global bond yields has paused, with lower yields lifting sentiment ahead of Nvidia's earnings call. The US dollar is consolidating after pushing to its highest level since mid-April through yesterday, with the broader G10 settling into narrow ranges. Per Bloomberg, oil is down roughly 2 percent with Brent slipping toward 110 per barrel after President Trump called off a planned military strike on Iran following appeals from Persian Gulf allies, fuelling speculation that negotiations could restart. CAD is tracking the broader G10 in a tight range against the dollar, with the softer oil tape removing the modest commodity tailwind that supported the Loonie on the crosses earlier this week.

FOMC Minutes and the Warsh Era:

Today's FOMC minutes at 2pm Eastern are the first under Kevin Warsh's chairmanship and the first record investors will read for the post-Powell reaction function. The April meeting produced four dissents, the most since October 1992. Per CNBC, Governor Stephen Miran dissented in favour of a 25 basis point cut, while Cleveland's Beth Hammack, Dallas's Lorie Logan, and Minneapolis's Neel Kashkari supported the hold but rejected the easing bias embedded in the statement. Per their public statements, Hammack flagged inflation pressures as broad-based with the Iran war and oil-price surge threatening the 2 percent goal, while Logan said she is increasingly concerned about inflation getting back to target given the prospect of prolonged supply disruptions. The minutes will be read for two things: whether staff continue to describe oil-driven inflation pressures as transitory or have shifted to language around de-anchoring expectations, and how close other voting members were to joining the hawkish dissenters. A hawkish pivot at the June 17 meeting becomes more credible if the record shows the dovish camp losing ground on the energy framing.

Bond Market Pauses but Repricing Intact:

Global long-end yields are lower this morning per CIBC, with the multi-day run up in rates pausing as risk sentiment recovers ahead of the Nvidia print. The pause is tactical rather than a reversal. Per Bloomberg, the 10-year Treasury yield continues to trade with a meaningful premium to the earnings yield on the S&P 500, the widest gap since the early 2000s, leaving equity valuations exposed if the long end resumes its push higher. The structural drivers of the repricing remain in place: fiscal sustainability concerns, sticky inflation, the unanchoring risk flagged by the hawkish FOMC dissenters, and limited political appetite for fiscal consolidation. The MOVE index sits well above its recent range, and the dollar continues to draw support from the wider rate advantage versus the euro and other majors. The setup keeps USD on the front foot even on days when the long-end tape eases, as today's price action illustrates.

Canadian Data/Outlook:

The Canadian calendar is empty today, with the next domestic catalyst the May 29 GDP release. Yesterday's April CPI report continues to set the tone: headline at 2.8 percent year-over-year was driven almost entirely by gasoline, while the core measures preferred by the Bank of Canada averaged 2.05 percent, near a five-year low. Per CIBC's Central Bank Watch, money markets price a 2 percent probability of a 25 basis point hike at the June 10 Bank of Canada meeting and 0 percent probability of a cut. Published bank forecasts hold the BoC overnight rate flat at 2.25 percent through 2026, with the framing that policymakers will wait for further clarity on the macroeconomic implications of the war before moving on rates. The soft core read removes the urgency on either side and reinforces the on-hold base case the desk has carried since the April meeting.

Fed Watch:

Per CME FedWatch, the probability of a single 25 basis point cut by the December FOMC meeting sits at 15.4 percent, with a 5.4 percent probability of a hike and a 78.2 percent probability the Fed holds at the current 3.50 to 3.75 percent range through year-end. The pricing has been stable for two weeks and the May minutes are the next event that can shift it. Per RBC, the strategists' base case has removed all Fed cuts from 2026 and 2027 and now flags the risk as skewed toward a hike, the most hawkish bank repricing of the cycle. The June 17 meeting is the next FOMC decision and the first under Warsh with a live policy outcome rather than a record release.

Technical Picture:

Resistance: 1.3799 first test, with 1.3869 the next level out and CIBC's 200-day moving average reference at 1.3813 sitting in between as the most-watched intermediate level.
Support: 1.3728 trendline confirmation, then 1.3643 secondary support.
Outlook: Per CIBC's strategists, the desk continues to favour a move toward the 200-day moving average at 1.3813, especially if the market remains nervous about global inflationary expectations, and would use that level as an opportunity to establish fresh USD short positions. The pair is now seven sessions into the upside extension off the 1.3540 area, and the FOMC minutes are the obvious catalyst for either continuation toward 1.3813 or a corrective pullback toward 1.3728.

Week Ahead:

The US Core PCE print on May 28 is the next major US inflation pivot and the read-through from April's hot CPI and PPI to the Fed's preferred measure. The Canada March GDP release on May 29 is the only domestic data point before the June 10 BoC decision.

Other Notes:

• EUR/USD has broken below 1.16 for the first time since early April, with the pair trading below both its 100-day at 1.1703 and 200-day at 1.1683 moving averages on a clean deterioration in technical momentum.
• UK April headline CPI printed at 2.8 percent year-over-year against the 3.0 percent consensus, with services and core measures also undershooting, though sterling barely reacted as markets discount the mechanical base-effect roll-off.
• Nvidia's after-close earnings call is the second-tier US risk catalyst today, with commentary on AI capex pipeline and hyperscaler demand mattering more than the headline print for broader risk sentiment.