Canadian Dollar Update – Canadian dollar walloped
- Tariffs are coming to Canada and Mexico
- US PCE Price index data on tap
- USD grinding higher.
USDCAD: open1.4489 overnight range 1.4431-1.4511, close 1.4492, WTI $72.506 Gold, $2793.35
The Canadian dollar plunged nearly 200bps late Thursday afternoon after Trump appeared to reaffirm his desire to levy 25% tariffs on Canada.
In an interview with Bloomberg he was asked if he still planned to put a 25% tariff on all goods from Canada. Trump answered “Tariffs are coming on Saturday, the first.“ He wouldn’t commit to including tariffs on oil.
USDCAD soared to 1.4595 from 1.4415 in a flash then dropped back to 1.4500 just as quickly. That may be due to the fact that although the reporter asked if he planned to 25% tariffs, Trump did not mention a level. Clutching at straws? Maybe, but an article in the Wall Street Journal suggests that officials were working feverishly to let Trump keeps his promise but avoid devasting businesses on both sides of the border.
EURUSD traded softer in a 1.0366-1.0413 band. The single currency is under pressure after the ECB’s decision to cut rates by 25 basis points and a mixed to dovish outlook. The announcement reaffirmed that they had a data-driven, meeting-by-meeting strategy.
GBPUSD traded similarly to EURUSD and drifted in a 1.2401-1.2440 range. Prices saw limited movement with the absence of significant UK economic data. The Bank of England is set to meet next week, but the broader G-10 landscape remains overshadowed by uncertainty surrounding Trump’s tariff threats.
USDJPY 1traded firmer in a 153.92-154.93 band after comments from BoJ Governor Kazuo Ueda, who appeared hesitant about a near-term rate hike. Mr Ueda pointed out that the recent uptick in inflation would not be sustained but added that any future hikes will be contingent on economic conditions aligning with their forecasts.
AUDUSD 0.6204-0.6238 remains pressured following Trump’s renewed tariff threats against China. Trading activity was subdued due to holidays across Asia, limiting overall FX volumes.
Today’s US data includes the PCE price index.
By KBFX | January 31, 2025 | Daily Update |
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