- Canada retail Sales expected to have shrunk by 0.4% in January.
- Trump and Defence Secretary to speak at 11:00 am
- USD dollar opens higher compared to yesterday—CAD outperforms.
USDCAD: open 1.4337, overnight range 1.4314-1.4344, close 1.4325, WTI 67.92, Gold 3030.22
The Canadian dollar has been sinking all week but managed to recoup all of Thursday’s losses by the end of the day, though it still remains in a downtrend.
Bank of Canada Governor Tiff Macklem delivered a speech yesterday titled Navigating Tariff Uncertainty. The title is misleading because he is not driving the bus—he is just a passenger. The BoC's mandate is to control inflation, and he does not have the tools to offset the economic impact of a trade war or tariffs directly. His concern is to prevent the tariff problem from becoming an inflation problem.
Canadian retail sales data should not have any impact on USDCAD trading because the focus is on tariffs. Furthermore, traders may exercise some caution ahead of President Trump and Defense Secretary Pete Hegseth’s remarks from the Oval Office at 11:00 a.m.
WTI is consolidating in a 67.88-68.65 range, and prices are poised to end the week with a gain. Oil is underpinned by Trump’s latest sanctions on Iran, which also ensnared a Chinese refiner and tankers supplying it with crude. China describes US sanctions on Iran as “illegal and unjustifiable unilateral actions.”
EURUSD traded in a 1.0820-1.0859 range overnight, remaining on the defensive after reaching 1.0955 on Tuesday. The passage of Germany’s €500 billion infrastructure and defense spending bill failed to provide any lift, as it was expected. The intraday technical outlook remains bearish as long as prices stay below 1.0880.
GBPUSD traded defensively in a 1.2923-1.2973 range while giving up all of its weekly gains. Traders dismissed a slight uptick in UK consumer confidence (actual -19, previous -20) and remained focused on next week’s UK budget.
USDJPY rose from 148.59 in Asia and reached 149.66 in Europe before falling back to 148.87 in NY trading today. Japan’s National CPI rose 3.7% y/y, slightly lower than January’s 4.0% reading. Excluding fresh food, CPI climbed 3.0% versus 2.9% expected. The results back BoJ Governor Ueda’s cautious stance on rate hikes.
AUDUSD traded between 0.6284 and 0.6307, consolidating losses from the previous session and opening in New York near the lower end of its range. The combination of broad US dollar strength, Trump’s tariff policies, and lingering concerns about China’s economic outlook pressured the currency.
