- Global equities grind higher
- Markets looking ahead to Friday’s US inflation numbers.
- US dollar unable to hang on to post-NFP gains.
USDCAD open: 1.3568, overnight range 1.3563-1.3597, close 1.3578, WTI 64.46, Gold 5062.13
The Canadian dollar dropped in the wake of stronger than expected US nonfarm payrolls numbers but managed to recoup most of its losses in the aftermath, then consolidated the move overnight.
Trump’s trade offensive against Canada hit a modest speed bump yesterday after eight Republicans joined Democrats in backing legislation aimed at ending tariffs on Canadian imports. The move carries more symbolic weight than practical impact, however, as any bill that meaningfully undermines the tariff strategy would almost certainly face a presidential veto.
WTI crude is hovering near the middle of its 64.19–65.11 range. Upside momentum stalled after the Energy Information Administration reported an 8.5-million-barrel build in US crude inventories last week. Even so, prices remain underpinned by ongoing Iran–US nuclear discussions and the risk that geopolitical tensions could escalate if diplomacy unravels.
The durability of the strong-jobs narrative faces another test today with weekly jobless claims expected at 222,000 compared with 231,000 previously. Tomorrow’s CPI is forecast to cool to 2.5% y/y from 2.7%, adding another layer to the rate debate.
Asian equity markets closed mostly firmer. Japan’s Topix gained 0.70% on optimism surrounding PM Takaichi’s stimulus measures, while Australia’s ASX 200 rose 0.32%. Hong Kong’s Hang Seng slipped 0.86%.
As of 7:20 am, European indices are in positive territory. Germany’s DAX is higher by 1.38%, France’s CAC 40 is up 0.91%, and the UK’s FTSE 100 has climbed 0.12%. S&P 500 futures are have firmed by 0.30%, the US Dollar Index is 96.83, and the 10-year Treasury yield is 4.16%.
EURUSD traded in a 1.1852–1.1888 range, underpinned by the January 20 uptrend line near 1.1800. With no major euro area releases in focus, direction is being dictated by swings in US dollar sentiment and shifting expectations around Fed policy.
GBPUSD rose inside a 1.3605–1.3655 band despite a barrage of mixed UK data. Fourth-quarter GDP rose just 0.1%, and industrial production, manufacturing output, and business investment disappointed. The muted currency reaction contrasted with a record high in the FTSE 100. BoE Deputy Governor Sarah Breedon noted that if conditions evolve as expected, rate cuts could come within the next couple of meetings, reinforcing resistance near the 1.3750 downtrend line.
USDJPY dipped in a 152.27-153.55 band as traders weighed a Bank of Japan rate hike aimed at against PM Takaichi’s fiscal stimulus push.
AUDUSD consolidated recent gains in a 0.7105–0.7148 range. The pair found additional support after RBA Governor Michele Bullock signaled a readiness to tighten further if inflation were to reaccelerate, particularly if readings returned with a “3” handle.
There are no Canadian economic reports scheduled for release today.
