Today market outlook

[Zeologic]

The Canadian dollar faces pressure from US-Canada trade risks.

The USDCAD commodity currency pair shows a bullish bias, indicating that the CAD remains under significant pressure relative to the USD, although the pair's upward momentum could stall if oil prices strengthen. On September 23, USDCAD formed a bullish candlestick, extending previous gains. The price currently hovers around 1.41029, with a high of 1.41096 and a low of 1.40566 on the FXOpen chart.

The US dollar retains its appeal amidst global geopolitical uncertainty and market expectations for a relatively cautious Fed interest rate policy path. The Fed raised interest rates by 25 basis points to the 3.75%–4.00% range on September 16—the first hike since 2023—whereas the Bank of Canada (BoC) held rates steady at 2.25% on September 2. An interest rate differential of 1.50–1.75 percentage points between the Fed and the BoC provides support for the USD against the CAD.

Canadian inflation remains around 3%, driven primarily by a surge in energy prices, while core inflation holds steady near the 2% target. The USD is gaining support from rising US bond yields, driven by relatively strong US economic data and expectations of a more hawkish Fed policy, making USD-denominated assets relatively more attractive.

The CAD faces risk-related pressure stemming from US-Canada trade dynamics. BoC Governor Tiff Macklem stated that new US tariffs could suppress Canadian growth in the fourth quarter to below 1%, down from the previous projection of 1.5%. However, relatively high oil prices provide support for the CAD, given Canada's status as an energy exporter. Macklem also noted that oil prices around the $100 mark could keep Canadian inflation elevated.

Today, the market will focus on retail sales data. For the USD, attention is centered on the release of Initial Jobless Claims and New Home Sales figures, as well as comments from Fed officials. Strong US data could once again drive up US bond yields and support the USD. Technically, USDCAD is trading above the MA50 and shows a bullish bias; the primary trading range is estimated to be between 1.39700 and 1.41200. Immediate support is around 1.40000, with the next target at 1.3960. Immediate resistance is around 1.4100, with the next target at 1.4150. This forecast could be wrong.

[Zeologic]

The Australian Dollar retreated due to the strengthening US Dollar.

The AUD/USD pair has shown a bearish trend; although both central banks lean towards a hawkish stance, USD demand has been stronger, driven by safe-haven flows. According to the FXOpen chart, AUD/USD formed a bearish candle on September 24, closing at approximately 0.70086, with a high of 0.70451 and a low of 0.70057.

The RBA has maintained the cash rate at 4.35%, but Governor Michele Bullock noted that core inflation risks remain at 3.6%—above the 2–3% target—and the market anticipates a high probability of a rate hike at the September 29 meeting. This factor could limit the AUD's decline.

Australia added approximately 39,500 jobs in August, well above the expected figure of around 20,000. However, the unemployment rate rose from 4.5% to 4.6%, resulting in mixed data. Employment figures and slowing domestic economic growth limit the RBA's room to raise interest rates more aggressively without disrupting economic activity.

As a commodity-proxy currency, the AUD is highly sensitive to price dynamics in iron ore and copper, as well as the outlook for China's economic recovery. The Xi-Trump meeting is a major focus, as developments in US-China trade relations could influence risk sentiment and China's economic outlook. If the meeting boosts optimism regarding global trade, the AUD could receive a boost; conversely, if new tensions arise, the AUD could come under pressure.

The US Dollar continues to draw strength from market expectations that the Fed will keep interest rates higher for longer to curb inflation. The Fed raised rates by 25 basis points to a range of 3.75%–4.00% on September 16 and signaled that further hikes might be necessary, as inflation is not yet fully under control.

US PCE inflation in July stood at 3.7%, well above the Fed's 2% target. Additionally, the USD has received a boost from safe-haven sentiment. High global geopolitical uncertainty is driving global capital flows back into the USD as a safe-haven currency.

From a technical perspective, AUD/USD has crossed below the 200-day EMA, signaling a bearish outlook. However, this does not yet represent a strong fundamental bearish trend, as expectations of RBA interest rate hikes continue to provide a buffer for the AUD. The projected price range for AUD/USD is 0.69700–0.71400. Immediate support is around 0.70000, with the next target at approximately 0.69800. Immediate resistance is around 0.70500, with the next target at approximately 0.71000. This forecast could be wrong.