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CANADA: Today’s USDCAD Option Expiry Biased Higher

CANADA
CanadaBulletMarketsForeign Exchange BulletsNorth America
  • USDCAD has pushed a little higher overnight, with a session high of 1.4411, but has mostly held just under the 1.44 handle for relative stability after large swings through Mon-Wed.
  • Retail sales at 0830ET is the last notable data release before the BoC on Wed but it’s unlikely to move the needle with 23bp of cuts priced.
  • US trade policy remains a far more important driver, with Trump’s WEF address expected at ~1100ET today likely more impactful.
  • The recent swings have seen wide ranges for technical levels, with resistance at 1.4516 (Jan 21 high) and a key support at 1.4261 (Jan 20 low).
  • Today’s option expiry is biased higher, with largest groupings at 1.4405 ($796m), 1.4450 ($1.08bn) and 1.4500 ($633mn).
  • CIBC earlier this week wrote “The market implied probability of spot moving above 1.4610 by Q2 is just over 20%; above 1.4960 is just over 10% [those levels being under various tariff scenarios]. This implies that while high-stake tariffs are not expected to be the base case, the market has assigned a larger-than-zero chance that they can happen.”
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  • USDCAD has pushed a little higher overnight, with a session high of 1.4411, but has mostly held just under the 1.44 handle for relative stability after large swings through Mon-Wed.
  • Retail sales at 0830ET is the last notable data release before the BoC on Wed but it’s unlikely to move the needle with 23bp of cuts priced.
  • US trade policy remains a far more important driver, with Trump’s WEF address expected at ~1100ET today likely more impactful.
  • The recent swings have seen wide ranges for technical levels, with resistance at 1.4516 (Jan 21 high) and a key support at 1.4261 (Jan 20 low).
  • Today’s option expiry is biased higher, with largest groupings at 1.4405 ($796m), 1.4450 ($1.08bn) and 1.4500 ($633mn).
  • CIBC earlier this week wrote “The market implied probability of spot moving above 1.4610 by Q2 is just over 20%; above 1.4960 is just over 10% [those levels being under various tariff scenarios]. This implies that while high-stake tariffs are not expected to be the base case, the market has assigned a larger-than-zero chance that they can happen.”