Canadian Dollar Update – Canadian dollar going nowhere

• US Retail Sales and PPI data on tap
• Prime Minister Carney is in China
• US dollar opens with small bid

USDCAD open: 1.3888, overnight range 1.3880-1.3898, close 1.3893, WTI 61.95, Gold 4631.21

The Canadian dollar was an afterthought in a dull overnight session even though gold and oil prices climbed sharply.

The Canadian dollar may be trading defensively after Trump declared that the United States-Mexico-Canada-Agreement (USMCA) was irrelevant. Those comments do not bode well for this years trade pact renegotiations.

Today, US PPI and Retail Sales data are on tap but confidence in the American data has deteriorated due to the ongoing fall-out from the government shutdown.

Asian equity markets closed firmer. Japan’s Topix advanced 1.26%, Hong Kong’s Hang Seng gained 0.56%, and Australia’s ASX 200 added 0.14%.

As of 7:30 am, the UK FTSE 100 up 0.32% while the French CAC 40 is flat and the German DAX is down 0.42%. S&P 500 futures are down 0.42%, the US Dollar Index sits at 99.09, and the US 10-year Treasury yield is 4.157%.

EURUSD traded in a 1.1636–1.1658 range and is pressing the upper end of that band in early New York trade. Momentum is lacking as traders wait for a catalyst that can break the current stalemate, and recent US data has failed to deliver. Geopolitical headlines continue to swirl.

GBPUSD traded sideways in a 1.3420–1.3459 range and remains directionless. The inability to sustain gains beyond 1.3570, combined with expectations for further Bank of England rate cuts, leaves the pair vulnerable. A decisive break below 1.3420 would expose downside toward the 1.3270 area.

USDJPY dropped from 159.45 to 158.60 range due to increased fears of Bank of Japan intervention. According to the Nikkei, Prime Minister Sanae Takaichi has reportedly signaled to senior ministers her intention to dissolve parliament as early as January 23 and call a February election. A stronger mandate would bolster her push for expanded fiscal stimulus.

AUDUSD drifted with a negative bias in a 0.6677–0.6703 range. Upside momentum remains capped as traders scale back expectations for any near-term RBA rate hike while the Fed is widely expected to remain on hold.