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FOREX: CAD Sold in Size as Trump Targets Day One

FOREX
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  • Markets hold a risk-off footing into the NY crossover, with Trump's tariff talk overnight unnerving sentiment and prompting outperformance in haven currencies. As a result, JPY outperforms, while trade sensitive FX (most notably CAD and AUD) are softer against all others.  
  • While the pursuit of tariffs is certainly not new news for the administration, the market reaction across both the MXN and CAD today suggests markets had been expecting a more gradual approach to trade restrictions following the nomination of Scott Bessent to the Treasury over the weekend.
  • Trump's pledge to pass the tariffs via executive order could well be setting a precedent here, with high-level economic policy passed through directly from the Oval Office. With CAD the primary target in G10, USD/CAD made light work of the 1.4100 handle as well as YTD highs, printing 1.4178 in the process.
  • Sustainability of the move lower in CAD will depend on the Canadian authorities' ability to cooperate with the Trump administration on drug and migration controls, with solid concessions likely needed to avoid any punitive measures on trade.
  • US consumer confidence data marks the data highlight today, with markets expecting the number to tick higher to 111.4 from 108.7. With the data capturing the immediate aftermath of the Presidential election, markets will be on watch for any further reversal of pre-vote jitters - as evidenced in the gradual incline for the University of Michigan sentiment index over November. 
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  • Markets hold a risk-off footing into the NY crossover, with Trump's tariff talk overnight unnerving sentiment and prompting outperformance in haven currencies. As a result, JPY outperforms, while trade sensitive FX (most notably CAD and AUD) are softer against all others.  
  • While the pursuit of tariffs is certainly not new news for the administration, the market reaction across both the MXN and CAD today suggests markets had been expecting a more gradual approach to trade restrictions following the nomination of Scott Bessent to the Treasury over the weekend.
  • Trump's pledge to pass the tariffs via executive order could well be setting a precedent here, with high-level economic policy passed through directly from the Oval Office. With CAD the primary target in G10, USD/CAD made light work of the 1.4100 handle as well as YTD highs, printing 1.4178 in the process.
  • Sustainability of the move lower in CAD will depend on the Canadian authorities' ability to cooperate with the Trump administration on drug and migration controls, with solid concessions likely needed to avoid any punitive measures on trade.
  • US consumer confidence data marks the data highlight today, with markets expecting the number to tick higher to 111.4 from 108.7. With the data capturing the immediate aftermath of the Presidential election, markets will be on watch for any further reversal of pre-vote jitters - as evidenced in the gradual incline for the University of Michigan sentiment index over November.