Dollar Trends Lower While Loonie Gets Dragged — North American Mid-Week Market Update

[Redator]

The Dollar index is consolidating below the 100.00 level for the second consecutive week as Tuesday’s rally in the USD was not strong enough to hold. The DXY is trading at 98.80 and hasn’t crossed above 100 this week.

Between renewed menaces and the actual delay in implementing tariffs, US President Trump is making sure that the ongoing trend of USD selling doesn’t stall.

The announcement in the middle of last week from the US Federal Court boosted the USD initially, though the appeal of the court decision just added to more uncertainty.

Overall mixed US Data hasn't helped to add demand for the Greenback.
Manufacturing PMI and JOLTS beat while ADP Employment and Services PMI, entering into contraction, missed - everybody looking to price in cuts would focus more on the negatives, especially with 70% of the US Economy being service oriented, and the JOLTS data being a month-old (as the data released is from the past month).

Equity Indices Snapshot

US and Canadian Indices have had quite a positive week with a generally positive sentiment from Markets, also propelling Industrial Metals, Oil and traditionally more risk-on currencies like the AUD and NZD.

I would take a look at the S&P 500 for a guide to this week's appetite for buyers as we approach the 6,000 Milestone - Momentum will find a few hurdles as traders brace for the upcoming Non-Farm Payroll report on Friday 6th.

Breaking the level before the data gets released will show that markets are looking at other themes like the de-escalation of trade tensions (i.e. Taco Trump).

Still, expect a lot of volatility as all eyes are on the upcoming NFP report.

Bank of Canada June Meeting

There was the Bank of Canada rate decision this morning, the BoC held rates at 2.75% and are still waiting for more insights on the impact of US Tariff policies.

There has been a bounce in Canadian consumption and hiring, but the Central Bank would like to see more - in the meantime, there is still a cut about halfway priced in for the July meeting, which won't materialize if the data holds.

The May headline inflation report came in at 1.7%, below the 2% Target though the BoC's favourite Core CPI is still at 2.5%.

There isn't any particular citation from Macklem or Rogers to note.

US Dollar Mid-Week Performance vs Majors

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USD vs other Majors, June 4, 2025 - Source: TradingView.

The Greenback is onto another losing week, down against all majors.

There has been some particular strength from Asian-Pacific currencies, boosted from the pushback of US import tariffs on many Chinese goods all the way to August 31.

Canadian Dollar Mid-Week Performance vs Majors

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CAD vs other Majors, June 4, 2025 - Source: TradingView.

The Loonie got somewhat dragged down by the USD and is losing the most against the strong APAC currencies. The Canadian Dollar is still broadly unchanged against European Majors.

The absence of a cut this morning gives the CAD some fundamental strength, though markets will be looking at Canadian employment data coming at the same time as the NFP before moving the currency forward.

Intraday Technical Levels for the USD/CAD

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USD/CAD 1h Chart, June 4, 2025. Source: TradingView

USDCAD broke below the past week's lows and has started to form a downward channel with decent selling momentum.

Currently trading around 1.3680, there isn't much to retain the USDCAD from stabilizing below the 1.37 level and moving down further towards the 1.36 psychological level.

The hourly RSI is back to neutral from oversold and EMA 20 and 50 are acting as Resistance.

There are rumours of a trade deal coming up between the US and Canada, potentially next week.

I would focus on the current trend before the data, though do be cautious on the double Employment report on Friday.

US and Canada Economic Calendar for the Rest of the Week

As discussed before, all eyes are on the double employment report coming in on Friday at 8:30 A.M E.T.

US Non-Farm Payrolls are expected at 130K and Canada is expecting a drop of 15K.

The CAD tends to move on the Ivey PMI Data that gets released tomorrow at 10:00 A.M., therefore keep this one in check. It's expected at 48.3, already in contraction territory with last month's report at 47.9.

For the rest, a few FED Speakers with only Kugler being a voter for 2025 and the weekly Jobless Claims report coming up tomorrow.
Safe Trades!

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