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CANADA: USDCAD Back A Little Below Pre-WSJ Headlines As Tariff Talk Dominates

CANADA
CanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • Tariff headlines continue to dominate proceedings after President Trump said last night that he thinks 25% tariffs on Canada and Mexico will be enacted from Feb 1, dashing some optimism after reports yesterday had anticipated no tariffs would be unveiled on “day one”.
  • Canadian premiers and officials are still working on a response, with Minister for Intergovernmental Affairs (and recently promoted FM) LeBlanc saying none of this should be surprising with Canada still committed to talks on border security.
  • USDCAD currently at 1.4443 is back to just 20-25 pips below levels seen prior to the market-moving WSJ report yesterday. That’s via yesterday’s low of 1.4262 (clearing multiple supports) before spiking to 1.4516 overnight for fresh highs since early in the pandemic and before that 2016.
  • Those swings have established wide initial technical levels, with further resistance seen at 1.4539 (Fibo projection) and support at 1.4230 (50-day EMA).
  • Surprisingly, whilst under heavy pressure having slid 0.9% against the US dollar, CAD isn’t bottom of the G10 FX pack and is broadly in line with AUD and NZD whilst outperforming NOK with oil prices pushing lower.
  • CORRA futures are trading up to 3 ticks firmer on the day, whilst BoC-dated OIS prices 19bp of cuts for next Wednesday’s BoC decision.
  • Today’s CPI report offers some near-term focus. MNI Canada CPI Preview: https://media.marketnews.com/Canada_CPI_Prev_Jan2025_c2d4f416b4.pdf
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  • Tariff headlines continue to dominate proceedings after President Trump said last night that he thinks 25% tariffs on Canada and Mexico will be enacted from Feb 1, dashing some optimism after reports yesterday had anticipated no tariffs would be unveiled on “day one”.
  • Canadian premiers and officials are still working on a response, with Minister for Intergovernmental Affairs (and recently promoted FM) LeBlanc saying none of this should be surprising with Canada still committed to talks on border security.
  • USDCAD currently at 1.4443 is back to just 20-25 pips below levels seen prior to the market-moving WSJ report yesterday. That’s via yesterday’s low of 1.4262 (clearing multiple supports) before spiking to 1.4516 overnight for fresh highs since early in the pandemic and before that 2016.
  • Those swings have established wide initial technical levels, with further resistance seen at 1.4539 (Fibo projection) and support at 1.4230 (50-day EMA).
  • Surprisingly, whilst under heavy pressure having slid 0.9% against the US dollar, CAD isn’t bottom of the G10 FX pack and is broadly in line with AUD and NZD whilst outperforming NOK with oil prices pushing lower.
  • CORRA futures are trading up to 3 ticks firmer on the day, whilst BoC-dated OIS prices 19bp of cuts for next Wednesday’s BoC decision.
  • Today’s CPI report offers some near-term focus. MNI Canada CPI Preview: https://media.marketnews.com/Canada_CPI_Prev_Jan2025_c2d4f416b4.pdf