Canadian Dollar Update – Canadian dollar marking time

• Bank of England leaves rates unchanged-split decision
• Geopolitical tensions ease
• US dollar opens with gains across the board

USDCAD open: 1.3693, overnight range 1.3661-1.3700, close 1.3664, WTI 64.14, Gold 4877.19

The Canadian dollar is an after-thought in global FX trading as traders are focused on US equity markets, US economic data and US relations with Iran and China. Traders are hoping that BoC Governor Macklem who is speaking at 12:30 today will provide some insight into the Canadian dollar direction.

WTI oil was choppy in a 63.47-64.67 range and is at 63.87 in NY.  The retreat is due to an easing of tensions between the US and Iran who are meeting in Oman today.

The US dollar is grinding higher as global equities retreat and political risk in the UK intensifies following fresh fallout from the Epstein files. Support for the greenback is also coming after Trump and Xi Ping chatted yesterday.

Any remaining doubts that Fed Chair nominee Kevin Warsh might lean hawkish were brushed aside after Trump made it clear that higher rates would have been a deal-breaker. Trump said Warsh would never have been nominated had he argued for rate hikes, underscoring the White House’s clear preference for easier monetary policy.

Asian equity markets closed mostly lower, with the Hang Seng the lone bright spot, finishing up 0.14 percent. Australia’s ASX 200 fell 0.43 percent, while Japan’s Topix ended flat.

As of 7:20 am, European markets are mixed to soft. France’s CAC 40 is up 0.21 %. The Germany DAX and the UK’s FTSE 100 are down 0.13%. S&P 500 futures have fallen 0.14%,  the US Dollar Index is at 97.89 and the 10-year Treasury yield is 4.265 %.

EURUSD traded in a 1.1780–1.1809 range and is hovering near the lower end of that band in New York. Broad US dollar strength weighed on the single currency alongside mixed-to-soft euro area data ahead of the ECB decision, where no rate change is expected.

GBPUSD fell in a 1.3556–1.3664 range due to political uncertainty linked to the Epstein revelations, which could cost Prime Minister Starmer his job.  The Bank of England’s split 5–4 decision to hold rates at 3.75 percent suggests that rate cuts are still on the table.

USDJPY rose in a 156.69–157.34 range, extending this week’s advance as markets price in a decisive election victory for Prime Minister Sane Takaichi on February 8.

AUDUSD traded in a 0.5977–0.6011 range and surrendered all of its post-RBA rate hike gains. The pullback was driven by broad US dollar demand and softer commodity prices.

Today’s US data includes JOLTS and weekly jobless claims. There are no Canadian releases.