February 11, 2025
- US imports of Steel and Aluminium threaten US National Security
- Fed Chair Powell testifies to Senate Banking committee today.
- USD a tad firmer but inside yesterday’s ranges.
FX at a Glance
USDCAD open 1.4343, overnight range 1.4316-1.4345, close 1.4318
USDCAD retreated yesterday, despite reports that Trump was expected to announce tariffs on imports of Canadian steel and aluminum due to National Security reasons. When the reports became reality, prices inched higher but remained within yesterday’s range.
“BY THE PRESIDENT OF THE UNITED STATES OF AMERICA-A PROCLAMATION
The Secretary has informed me that imports of steel articles from Canada and Mexico have increased significantly to levels that once again threaten to impair U.S. national security. Volumes from both Canada and Mexico increased overall, from 7.77 million metric tons in 2020 to 9.14 million metric tons in 2024. Imports have also surged in excess of historical norms of trade across numerous key product lines, such as long reinforcing bars, which have experienced import increases of 1,678 percent from Mexico and 564 percent from Canada. These surges have occurred while authorities in those countries have supported otherwise uncompetitive producers with subsidies and other interventions that have exacerbated the global excess capacity crisis.”
So much for delaying tariffs on Canada until March 1. “Blow it out your ear, Donny!”
The USDCAD reaction suggests that traders are hoping the latest tariff salvo is merely a ploy to allow Trump to extract more concessions from what he sees as a “lame-duck” Canadian government, led by a person who has quit the job and with cabinet ministers unlikely to be around by June. In Trump’s view, why not make life extremely difficult for a cabal of virtue-signalling, anti-Trump lefties.
Nevertheless, the spectre of a full-blown US/Canada trade war will limit USDCAD downside and keep 1.4800 in sight.
WTI oil prices are a touch firmer, rising from 72.31 to 73.33. The gain is due to fears of addition US sanctions on Russian and Iranian oil combined with Trump’s threat to “let all hell break out” in Gaza if the hostages are not released by noon on Saturday.
Canada December Building Permits are due. (forecast 2.3% m/m, previous -5.9%).
USDCAD Technicals
The intraday USDCAD technicals are mildly bullish above 1.4310 and looking for a move above 1.4380 to extend gains to 1.4460. A move below 1.4310 targets 1.4270.
The longer term technicals are unchanged. The USDCAD uptrend channel that began at the end of September remains intact while prices are above 1.4260. The top of the channel is at 1.4770, which suggests 1.4270-1.4700 will be the USDCAD range for the near term.
For today, USDCAD support is 1.4310 and 1.4270. Resistance is 1.4380 and 1.4420.
Today’s Range: 1.4310-1.4380
Chart: USDCAD daily
“Our National Security is Threatened”
President Trump decided that what was good for Canada and Mexico was good for the rest of the world. In addition to slapping steel and aluminum tariffs on Argentina, Australia, Brazil, EU countries, Japan, South Korea, and the United Kingdom, he went after Ukraine. Nothing like kicking Zelensky when he is dealing with Russia’s version of Trump.
Ho-Hum—We’ve Seen This Movie Before
The global market reaction to Trump’s latest outburst was a collective yawn. The US dollar remained rangebound, Asian equity markets closed flat except for Hong Kong. The Hang Seng lost 1.06%. Meanwhile, European bourses are flitting around either side of unchanged. S&P 500 futures are down 0.31%, but that has more to do with Fed Chair Powell’s Congressional testimony today rather than tariffs. Gold prices slipped from their peak and are trading at the overnight session low.
EURUSD
NY Open: 1.0318 Overnight Range: 1.0292-1.0326
EURUSD is trading with a negative bias as the rumor of tariffs on steel and aluminum from EU countries became a reality. Prices are also weighed down by widening ECB/US interest rate spreads and a lack of actionable Eurozone economic data. The EURUSD technicals are bearish below 1.0405.
GBPUSD
NY Open: 1.2362 Overnight Range: 1.2332-1.2378
GBPUSD traded lower after former noted BoE Monetary Policy Committee hawk Catherine Mann explained her dovish about-face. She was the lone MPC member advocating for a 50 bp rate cut last week, saying the magnitude of the move was needed “to cut through the noise” to convince traders that rates were going lower. The intraday technicals are bearish below 1.2380.
USDJPY
NY Open: 152.13 Overnight Range: 151.65-152.15
USDJPY drifted lower in Asia due to a bit of safe-haven demand for yen following the latest tariff news from America. The dip was shallow, and USDJPY recouped all its losses just before US markets opened. Prices are now above where they closed yesterday. Prices were also underpinned by the slight increase in the US 10-year Treasury yield from 4.50 to 4.52%.
AUDUSD
NY Open: 0.6271 Overnight Range: 0.6260-0.6288
AUDUSD traded narrowly, with the news of Trump’s tariffs having little impact. Prime Minister Anthony Albanese is hoping that Australia got a tariff exemption after talking with Trump. However, history suggests that his hope is misguided. AUDUSD gains may be limited ahead of next week’s RBA meeting when a 25 bp rate cut is expected. NAB Business Conditions were 3 in January (6 in December) while Business Confidence was 4 (-2 in December).
NZDUSD
NY Open: 0.5643 Overnight Range: 0.5629-0.5655
NZDUSD traded narrowly, with prices tracking broad US dollar moves.
USDMXN
NY Open: 20.6275 Overnight Range: 20.5937-20.6594
USDMXN had a slight pop when Trump announced the tariffs, then traded sideways overnight. The prospect of additional Banxico rate cuts combined with the looming US/Mexico trade war is underpinning prices.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC fix: 7.1716 vs exp. 7.3067 (prev. 7.1707)
Shanghai Shenzhen CSI 300 fell 0.46% to 3883.14
The PboC continues to set the Fix low to support the currency amid escalating trade tensions.
Sources: Yahoo Finance, Oanda, Investing.com, Google Finance
