- Carney’s Davos speech takes direct aim at Trump
- Trump’s Davos speech may be delayed
- US dollar consolidating awaiting the Davos shoe to drop
USDCAD open: 1.3843, overnight range 1.3802-1.3843, close 1.3838, WTI 59.99, Gold 4862.52
The Canadian dollar rallied is trading firmer and hit its session low in NY as traders await the highly anticipated Trump speech in Davos. For today, it is the only thing that matters for global financial markets.
WTI oil rose in a 59.23–60.60 range, underpinned by uncertainty around Trump and tariffs and the weak greenback.
Prime Minister Mark Carney dropped the gloves with his Davos remarks. He set the tone when he said “Canadians know that our old, comfortable assumption that our geography and alliance memberships automatically conferred prosperity and security is no longer valid. The old order is not coming back. We should not mourn it. Nostalgia is not a strategy. But from the fracture, we can build something better, stronger and more just.”
Financial markets are braced for the latest bout of Trump-driven volatility as he prepares to address the Davos gathering around 8:30 am ET. Travel hiccups added to the uncertainty after Air Force One was forced to turn back due to a minor electrical issue, pushing his arrival into Switzerland back and potentially delaying the speech by up to three hours.
Currency markets were directionless and confined to tight ranges, equity markets leaned lower across the board, and the US 10-year Treasury yield held steady. Gold was the standout, ripping higher by 2.7% to a peak of 4888.13 as geopolitical anxiety trumped everything else.
Equity markets in Asia fell for a third straight session, with Hong Kong the lone exception as the Hang Seng Index edged up 0.37%.
Australia’s ASX 200 slipped 0.37%, while Japan’s Topix dropped 0.99%, weighed down by rising bond yields and election-related uncertainty.
As of 7:40 am, European markets opened on the back foot, led by a 1.02% decline in Germany’s DAX. France’s CAC 40 was off 0.31% and the UK’s FTSE 100 slipped 0.22%. S&P 500 futures are flat, the US Dollar Index is 98.49 and, the 10-year Treasury yield sat at 4.283%.
EURUSD was subdued within a 1.1701–1.1734 range and carried a downside bias ahead of the Davos speech. Tariff risk between the US and the EU continues to cap rallies, reinforced by a broader risk-averse tone. Better-than-expected German and Eurozone ZEW surveys failed to gain traction, eclipsed by the ongoing Trump-Greenland saga.
GBPUSD remained under pressure in a 1.3403–1.3457 range after UK inflation accelerated to 3.4% y/y in December, slightly above expectations. Analysts at ING downplayed the data, arguing it is unlikely to alter the Bank of England’s policy trajectory.
USDJPY oscillated between 157.82 and 158.28 as geopolitical headlines collided with domestic political developments. Prime Minister Sanae Takaichi’s election call, coupled with proposals for tax cuts and debt-driven growth, has unsettled markets and driven long-dated JGB yields to record highs.
AUDUSD extended its recent rebound, rising through a 0.6728–0.6758 range and building on gains that began earlier in the week. A softer US dollar and firmer commodity prices continue to provide support.
Canada Industrial Product and Raw Material Price indexes are ahead, along with US construction spending and pending home sales.
