USDCAD: open 1.4355 overnight range 1.4355-1.4392, close 1.4374, WTI 67.19, Gold 2910.83
The Canadian dollar is slipping lower on the back of fresh tariff threats from Trump and increased fears of a U.S. recession.
It is a big week for Canadian dollar traders. In what is likely a political first, Canada has a new Prime Minister. The ruling Liberal Party selected him with the job by holding a party vote, and he won by 86% over his closest competitor. He is expected to call an election sometime this week.
The Bank of Canada is also in the spotlight. On Wednesday, Tiff Macklem meets to announce a 25 bps rate cut. The surprise would be if they leave rates unchanged.
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President Trump is at it again. On the weekend, he said he would impose a 25% tariff on Canadian dairy imports as soon as Monday or Tuesday. Fortunately, most Canadian dairy products are consumed domestically. In addition, Trump dismissed concerns that his inconsistent tariff actions were creating problems by saying it was a “period of transition.”
Friday, Fed Chair Powell reiterated that policymakers were not in a hurry to cut U.S. interest rates.
EURUSD traded in a 1.0805-1.0875 range, consolidating last week’s rally as traders awaited updates on Russia-Ukraine peace negotiations set to begin in Saudi Arabia later this week. Markets are also watching for details on the government’s ambitious €800 billion defense spending plan. A slight boost came from the Sentix Investor Confidence index, which improved from -12.7 to -2.9.
GBPUSD traded in a 1.2874-1.2948 range, moving sideways as broader U.S. dollar trends dictated price action. Powell’s cautious stance on rate cuts helped limit gains, despite lingering support from Friday’s subdued U.S. employment data.
USDJPY bounced around in the 147.09-148.03 band, dipping to the lower end of its range as speculation of a Bank of Japan rate hike this month gained traction. The outlook was reinforced after January’s labor cash earnings data showed a weaker-than-expected 2.8% year-over-year increase, missing the forecast of 3.2%.
AUDUSD traded between 0.6296-0.6330, staying within Friday’s range as Australian markets remained closed. Broader U.S. dollar weakness, fueled by concerns that Trump’s tariff agenda could push the U.S. economy into recession, provided modest support for the currency.
There are no top-tier U.S. or Canadian economic reports today.
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