January 28, 2025
- Trump talks tariffs and greenback soars
- December US Durable Goods Orders fall 2.2% (forecast 0.8%).
- USD opens with gains across the board.
FX at a Glance
USDCAD open 1.4413, overnight range 1.4367-1.4421, close 1.4376
USDCAD rallied after Trump expressed support for universal tariffs, although he wants a much higher starting point than what is incoming Treasury Secretary reportedly favours. Trump’s comments put every country exporting to the US on notice which gave the greenback a boost. Meanwhile, Canada faces a 25% tariff for goods going to the US beginning Saturday.
The tariff drama is preceded by the Bank of Canada and FOMC meetings on Wednesday. The BoC is expected to cut rates by 25 bps while the Fed leaves rates unchanged. The 10-year Canada/US bond spread remains at -131.2.
WTI oil fell from 73.87 to 73.08 due to broad US dollar strength and the latest tariff talk which suggests reduced global demand.
US December Durable Goods orders are fell 2.2% compared to expectations for a gain of 0.8%.
USDCAD Technicals
The intraday USDCAD technicals are bullish above 1.4380 and looking for a break above 1.4420 to target 1.4450. A move below 1.4380 targets 1.4340 and then 1.4310.
The October uptrend line is intact while prices are above 1.4280 with a series of lows in the 1.4290-1.4305 area adding another layer of support. A move above 1.4500 suggests further gains to 1.4700 while a break below 1.4280 targets 1.4120.
For today, USDCAD support is 1.4380 and 1.4340. Resistance is 1.4430 and 1.4460.
Today’s Range: 1.4360-1.4440
Chart: USDCAD daily
Tariff Man Strikes Again
Donald Trump must have felt that he was being ignored because of the massive media coverage of DeepSeek and its impact on AI stocks. That must have been why he flogged the tariff horse again. He responded to a question about incoming Treasury Secretary Scott Bessent favouring gradual increases in tariffs starting at 2.5% by saying he didn’t think that was Bessent’s view. He went on to say, “I have it in my mind what it’s going to be, but I won’t be setting it yet, but it’ll be enough to protect our country.” He also talked about slapping levies on semiconductors, pharmaceuticals, copper, steel, and aluminium. The news ignited fresh demand for US dollars.
Equities Recouping Losses
European equity indexes are in the green, with a 0.57% rally in the UK FTSE100 index lifting the others. However, S&P 500 futures gave up earlier gains and are flat. The US 10-year yield is steady at 4.563%.
EURUSD
NY Open: 1.0427
Overnight Range: 1.0419-1.0495
EURUSD is trading negatively following Trump’s latest tariff salvo, which is just another negative ahead of Thursday’s ECB meeting, where a 25 bp hike is widely expected along with dovish guidance.
GBPUSD
NY Open: 1.2439
Overnight Range: 1.2426-1.2500
Sterling is choppy inside a 1.2425-1.2525 range that has contained price action since Thursday, with prices seeing a bit of support from EURGBP selling. GBPUSD direction continues to be dictated by broad US dollar sentiment ahead of the ECB meeting on Thursday.
USDJPY
NY Open: 155.47
Overnight Range: 154.49-155.98
The safe-haven-tariff tug of war appears to have been settled, with the tariff side winning. Yesterday’s AI stock rout, which triggered broad-based risk aversion and demand for yen, has given way to broad-based US dollar demand from renewed tariff threats by President Trump. Prices are further supported by expectations that the Fed will leave rates unchanged at Wednesday’s meeting.
AUDUSD
NY Open: 0.6248
Overnight Range: 0.6243-0.6294
Australians returned from a long weekend to find that the January AUDUSD rally ended with the break below 0.6290. The risk-off sell-off was exacerbated by falling commodity prices, including iron ore, after President Trump repeated his tariff plans. In addition, Lunar New Year holidays in many parts of Asia reduced liquidity. Australian business confidence was -2, compared to -3 in November, while business conditions were 6 vs. 3 in November.
NZDUSD
NY Open: 0.5656
Overnight Range: 0.5653-0.5692
NZDUSD is on the defensive after gapping lower at Monday’s open. The slide halted until late yesterday afternoon when President Trump reiterated his favourite theme, universal tariffs. Liquidity was poor due to the start of China’s week-long Lunar New Year celebrations.
USDMXN
NY Open: 20.6498
Overnight Range: 20.6473-20.7831
USDMXN consolidated yesterday’s gains after Trump said he wanted universal tariffs of more than 2.5% but declined to disclose the level. The equity market disruption from DeepSeek, combined with divergent Banxico and Fed interest rate outlooks, is underpinning prices. The August uptrend line is intact above 20.1350.
BTCUSD (Bitcoin)
NY Open: 102,870
Overnight Range: 98,316-103,480
Rally interrupted: Bitcoin got spanked yesterday following news that China’s DeepSeek may be a cheaper, less energy-intensive alternative to AI. Prices firmed overnight and have recouped most of yesterday’s losses.
FX high, low, open (as of 6:00 am ET)
China Snapshot
Closed Lunar New Years Eve
PBoC Fix: 7.1698 (prev. 7.1705) as of January 27, 2025
Shanghai Shenzhen CSI 300 rose 0.41% to 3817.08-close January 27
Chart: USDCNY
Sources: Yahoo Finance, Oanda, Investing.com, Google Finance
