- Trump tariff delay not matched by Canada
- US and Canadian employment data ahead
- USD continues to slide due to Trumps muddle messaging
USDCAD: open 1.4315, overnight range 1.4280-1.4320, close 1.4296, WTI 67.54, Gold 2917.59
The Canadian dollar rallied hard on the news that President Trump decided to cancel the 25% tariffs on imports from Canada and Mexico but reimpose them in April. The news sparked widespread U.S. dollar selling against the major currencies as traders expressed their unhappiness with the muddled messaging coming out of Washington.
The U.S. may have delayed the tariffs, but Prime Minister Trudeau and Ontario Premier Doug Ford did not reciprocate. Canada will continue with 25% tariffs on $30 billion of U.S. imports, while Ontario’s 25% tariff on electricity exports stays in place.
Canada is expected to have added 20,000 jobs in February, while the unemployment rate rises to 6.7% from 6.7%. A weak report will send USDCAD higher, while the threat of tariffs will limit USDCAD downside on a strong result.
USDCAD will be choppy around 10:00 a.m. as $1.2 billion of option strikes in the 1.4290-1.4300 area and another $870 million of 1.4315-1.4325 strikes mature. In addition, there are about $3.8 billion of 1.4350-1.4360 strikes expiring.
The latest U.S. nonfarm payrolls report is projected to show a 160,000-job gain, up from last month’s 143,000, with the unemployment rate unchanged. A weaker-than-expected result will rekindle U.S. dollar selling.
EURUSD traded in a 1.0781-1.0871 range, supported by Eurozone Q4 GDP rising 1.2% y/y, which beat the 0.9% forecast. Yesterday, the ECB lowered its benchmark rate by 25 bps to 2.5%. The news had little impact as it had been well-telegraphed. EURUSD continues to be underpinned by German and EU plans to massively ramp up defense spending.
GBPUSD climbed from 1.2876 to 1.2945, with prices tracking broad EURUSD moves. GBPUSD got an added lift because recent UK data suggests that the Bank of England will lag the Fed in lowering interest rates. Domestic housing price data was ignored.
USDJPY was under pressure, with prices falling from 148.17 to 147.21, weighed down by concerns over Trump’s tariff policies and increased geopolitical uncertainty. Furthermore, the surging 10-year JGB yield (1.524%) exacerbated selling pressure as it strengthens the case for a Bank of Japan rate hike.
AUDUSD traded in a 0.6297-0.6336 range, with price action muted by conflicting forces. The currency found support from widespread U.S. dollar selling, but upside momentum was limited after China’s latest trade data showed a decline in exports.
