USD/CAD, AUD/JPY Outlook: Trade Hopes Fuel Commodity FX Strength

Sentiment was buoyant on Tuesday amid hopes for a breakthrough in US–China trade talks, which are expected to continue into Wednesday. According to US Commerce Secretary Howard Lutnick, negotiations are going “really, really well.” The Canadian dollar (CAD) and Australian dollar (AUD) led gains among majors, while the US dollar (USD) traded mixed. USD/CAD extended its decline, breaking below key technical levels, with further downside potential toward 1.36. AUD/USD continued to test the upper boundary of its 0.64–0.65 range, though stronger moves were seen in AUD/JPY amid broad risk-on appetite.

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USD/CAD Drops, AUD/USD Pressures Resistance Amid Trade Deal Hopes

Softer-than-expected UK earnings and a rise in jobless claims point to a slowing UK economy, bolstering bets of a Bank of England (BOE) rate cut. Economists polled by Reuters still expect two cuts this year, with the UK economy seen benefiting from being the first to strike a trade deal with the US. The BOE is still favoured to hold rates steady next week, but cut by 25bp to 4% at their August monetary policy meeting.

Meanwhile, the World Bank slashed its global growth forecast to 1.4% for 2025 (down 0.9%), citing fallout from President Trump’s trade war. A further 0.4% downgrade is projected for 2026. While a global recession isn’t forecast, growth has been downgraded for 70% of economies—perhaps a contrarian indicator, but certainly a reflection of market uncertainty.

• Wall Street futures edged higher, with the Nasdaq 100 rising 0.6% to its highest level since late February. S&P 500 futures gained 0.5%, reaching their highest since early March.
• The S&P 500 cash index now trades just 1.8% below its record high.
• The positive lead from Wall Street helped SPI 200 (ASX 200 futures) reach a record high overnight.
• Gold prices were flat and remain effectively unchanged for the week, hovering around $3,350.
• WTI crude oil briefly hit a 3-month high before reversing near $66, suggesting some profit-taking ahead of key US inflation data.

Commodity FX Embrace Positive Trade Outcome

The British pound (GBP) and Japanese yen (JPY) were the weakest FX majors, while the commodity FX currencies Canadian dollar (CAD) and Australian dollar (AUD) were the strongest on Tuesday. The US dollar (USD) finished centre of the pack.

USD/CAD Technical Analysis: US Dollar vs Canadian Dollar

The weekly chart shows that USD/CAD has invalidated a longer-term trendline from the 2021 low. It also appears to be ain a fifth wave lower which could see USD/CAD print new cycle lows before a retracement higher unfolds.

The next level of potential support on this timeframe could be the 1.3585 high-volume node (HVN) which is ~90 pips below current prices. The weekly RSI (14) is confirming the move lower and remains elevated above its oversold zone. That said, the weekly RSI (2) has formed a small bullish divergence in the oversold zone to warn of a near-term inflection point.

The daily chart shows Tuesday’s high perfectly respected the broken trendline, which shows the trendline’s significance remains in play despite it technically being invalidated. The near-term bias is therefore bearish while prices remain beneath Tuesday’s high (1.3728) with last week’s low (1.3645) and the 1.36 handle potentially in focus for bears.

AUD/JPY Technical Analysis: Australian Dollar vs Japanese Yen

While AUD/USD remains confined to its familiar 0.64–0.65 range, it continues to benefit from improved sentiment around US–China trade relations. That said, there's little new to add regarding this well-established range, with price once again testing its upper boundary.

In contrast, AUD/JPY continues to trend higher, in line with a bullish technical structure and broader risk-on tone. The support zone around ¥92 held firmly, propelling the pair 3.2% higher from its May low, including a 2.2% rally over the past three sessions. With momentum intact, a push toward ¥95 looks increasingly likely—unless optimism around US–China trade talks fades.

The 1-hour chart shows AUD/JPY holding within a well-defined bullish trend, with price action consolidating just beneath recent highs. This tight range suggests a potential continuation move, especially with dips toward 94 likely to attract buyers.

If support near ¥94 holds, bulls may look to target the 95.00 handle, followed by the April high at 95.30 as the next key resistance.

Economic Events in Focus (AEST / GMT+10)

• 08:45: NZD External & Long-Term Migration, Visitor Arrivals (Apr) (NZD/USD, AUD/NZD)
• 09:50: JPY PPI (May) (USD/JPY, EUR/JPY, Nikkei 225)
• 13:15: EUR ECB President Lagarde Speaks (EUR/USD, EUR/GBP, EUR/JPY)
• 19:00: EUR German Buba VP Buch Speaks (EUR/USD, EUR/GBP)
• 19:30: EUR German 10-Year Bund Auction, ECB’s Lane Speaks (EUR/USD, EUR/GBP, DAX)
• 21:00: USD MBA Mortgage Data: 30-Year Rate, Applications, Purchase, Refinance Indexes (USD, S&P 500, Nasdaq 100, Dow Jones)
• 22:30: USD CPI, Core CPI, Real Earnings (May) (USD, Gold, S&P 500, Nasdaq 100, Dow Jones)
• 22:30: CAD Building Permits (Apr) (USD/CAD, CAD/JPY, TSX)
• Thursday, June 12, 2025
• 00:30: USD Crude Oil Inventories, Refinery Runs, Gasoline & Distillate Data (WTI Crude Oil, Brent Crude Oil, USD)
• 01:00: USD Cleveland CPI (May), Thomson Reuters IPSOS PCSI (Jun) (USD, S&P 500, Nasdaq 100)

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge