USD/CAD Market Update

Current Level: Mid-1.36s (24hr range 1.3613–1.3680)

USD/CAD is trading at 1.3676 this morning, roughly 54 pips firmer than Monday's 1.3622 close after the pair found bids in the low-1.36s and ground steadily back into the middle of the range. Today's intraday range of 1.3613 to 1.3680 closes the gap on Monday's sub-1.36 print, and the upward trendline that defined last week's defense at 1.3645 to 1.3650 has now been retested from below. CIBC's strategists frame today's price action as a bounce off key technical support and remain sellers of any near-term rallies, holding their 1.3500 Q2 target intact. With the Bank of Canada and the Federal Reserve both scheduled to deliver decisions tomorrow morning, and the European Central Bank, Bank of England, US Q1 GDP and Core PCE all clustered into Thursday, the next 48 hours represent the highest-information window of the month for rates and FX.

Market Overview:

Risk appetite is fragile to start the session as equity markets open lower on a Wall Street Journal report that OpenAI is missing internal targets for both user growth and revenue. The US dollar is firmer against the G10 basket as the risk-off tone pushes the greenback to weekly highs, with CIBC noting the dollar index bouncing in line with broader haven flows. Global bond yields are marginally higher with no major moves of note. WTI is trading near 100 dollars per barrel after a roughly 4 percent jump on the day, the seventh consecutive up-session for the contract as the Strait of Hormuz remains effectively closed to commercial traffic per The National. The combination of a soft equity tape, a stronger dollar, and a sustained energy-price bid leaves USD/CAD pinned in a tight overnight band ahead of tomorrow's central bank cluster.

AI Complex Cracks on OpenAI Miss:

Equity markets are leading lower on a Wall Street Journal report, picked up across CNBC and Bloomberg, that OpenAI has missed several monthly internal targets for both user growth and revenue as enterprise customers diversify into Anthropic and Google's Gemini models. The selloff has hit the AI infrastructure complex hardest, with Oracle reportedly down roughly 7 percent in premarket trade, SoftBank lower by close to 10 percent in Tokyo, and Nvidia, Broadcom and AMD off between 3 and 5 percent. CIBC characterizes the move as markets starting to separate AI execution from hype, framing the shakeout as a bull-market correction rather than a regime change. For FX, the immediate impact is a haven bid for the dollar and a softer pro-cyclical tone that limits upside in commodity-linked currencies, including the Canadian dollar.

Hawkish BoJ Hold, June Hike on the Table:

The Bank of Japan held its policy rate at 0.75 percent overnight, but the vote split widened to 6 to 3, the most hawkish divide of Governor Ueda's tenure per Bloomberg. The board lifted its FY2026 core CPI forecast to 2.8 percent from 1.9 percent, while cutting the FY2026 GDP forecast to 0.5 percent from 1.0 percent, a stagflationary mix that pushed market-implied probability of a June 16 hike to roughly 74 percent on the wires. CIBC's view is that a June hike is largely priced in and that further near-term yen upside is therefore limited, with USD/JPY pushing toward the top of its range and the 160 to 162 zone offering attractive selling levels into any extension.

Canadian Data/Outlook:

The week's main domestic event is tomorrow's Bank of Canada decision and Monetary Policy Report, with Thursday's February GDP print as the secondary data release. CIBC's Central Bank Watch prices a 0 percent probability of either a hike or a cut at the April 29 meeting, and the Reuters poll conducted last week showed all 41 surveyed economists expecting a hold at 2.25 percent. Markets are aligned on the no-change call, with prediction-market and rates-curve pricing both indicating a hold probability above 90 percent. The MPR release alongside the statement will refresh the bank's inflation and output projections for the rest of 2026, providing the most plausible source of directional information from the meeting given how heavily the rate call itself is anchored. Thursday's GDP m/m print is forecast at 0.2 percent versus 0.1 percent prior, and a stronger reading would reinforce the hold-throughout-2026 base case that markets are increasingly priced for.

Fed Watch:

The Federal Reserve is widely anticipated to leave rates on hold at 3.75 percent at tomorrow's FOMC meeting. CIBC's Central Bank Watch prices a 1 percent probability of a hike and 0 percent for a cut at the meeting, and CIBC's strategists flag that current market expectations lean hawkish, opening the risk that dovish statement language drives a weaker USD. CME FedWatch shows roughly a 51 percent probability of no change at the December 2026 meeting and approximately 36 percent probability of one 25 basis point cut by year-end, broadly unchanged from last week as elevated oil prices complicate the disinflation path. The key forward question for tomorrow is whether Chair Powell's press conference acknowledges the inflation risk from sustained Hormuz-driven energy pressure, which would reinforce the no-cut path that markets are increasingly aligned on.

Technical Picture:

Resistance: 1.3700 (overnight high zone, immediate cap), 1.3728 (top of RBC's prior expected band), 1.3799 (CIBC's preferred re-entry short zone), 1.3932 (major; has rejected four consecutive rallies since January and must close above to turn the outlook bullish)
Support: 1.3645 (upward trendline; held on the close-test after Monday's intraday probe), 1.3596 (Monday's intraday low), 1.3526 (year-to-date low), 1.3482 (subsequent year-to-date low), 1.3420 (September 2024 low and RBC's longer-term target)
Outlook: The trendline defense at 1.3645 has held through Monday's break attempt and today's reversion higher, but CIBC's directional view is unchanged: sell rallies, target 1.3500 by Q2, and treat the 1.3700 to 1.3799 zone as the preferred fade. A close back below 1.3645 in the wake of tomorrow's central bank cluster would re-open the path toward 1.3526 and 1.3482, while a sustained break above 1.3728 would call the bearish setup into question and shift the focus back toward 1.3799 as the next test. With BoC and the Fed back-to-back tomorrow, an outsized statement reaction is the most plausible catalyst for either a sharper extension lower or a counter-trend rally.

Week Ahead:

Five central bank decisions across two days, plus the US Core PCE and GDP cluster, make tomorrow and Thursday the highest-information block of the month for rates and FX. Tomorrow's BoC and Fed back-to-back are both expected to hold, leaving the directional read to statement language and the BoC's MPR projections. Thursday's BoE, ECB and US data layer are the most plausible catalysts for a range break in either direction.

Other Notes:

• WTI traded near 100 dollars per barrel today, a roughly 4 percent gain on the day and the seventh consecutive up-session per The National, with the Strait of Hormuz still effectively closed to commercial traffic. The sustained energy bid is a key reason markets have compressed Fed rate-cut probabilities into the 30 to 40 percent range for the December 2026 meeting.
• The BoJ vote shift to 6 to 3 is the most hawkish split since Governor Ueda took office, with three members proposing an immediate hike to 1.0 percent. Markets now price approximately 74 percent probability of a 25 basis point hike at the June 16 meeting.
• OpenAI's reported user-and-revenue miss has surfaced internal tensions over data-center capex commitments per Bloomberg and CNBC reporting, with the AI infrastructure trade now the most-watched proxy for risk sentiment alongside oil.