February 24, 2025
- Impact from German elections fade.
- Trumps wants Mexico to impose tariffs on China.
- USD trades mixed in narrow ranges
FX at a Glance
USDCAD: open 1.4215 overnight range 1.4182-1.4228 close 1.4226
USDCAD bounced erratically overnight due to tariff talk, German elections, and Friday’s dire outlook of the impact of tariffs on the Canadian economy. BoC Governor Tiff Macklem warned the BoC was not equipped to respond to a trade war, He said “In the pandemic, we had a steep recession followed by a rapid recovery as the economy reopened. This time, if tariffs are long-lasting and broad-based, there won’t be a bounce-back. We may eventually regain our current rate of growth, but the level of output would be permanently lower. It’s more than a shock; it’s a structural change.”
WTI oil prices traded with a negative bias in a 70.02-70.67 range. The prospect of increased Opec supply, the reopening of the Turkey Iraq pipeline, and China’s economic woes are weighing on prices.
USDCAD Technicals
The intraday USDCAD technicals are bullish with the rally above 1.4190, which negated the intraday downward pressure and shifted the focus to resistance in the 1.4250 area.
The downtrend from the beginning of February on the 4-hour chart was broken with the move 1.4190. A break above resistance in the 1.4260-70 area sets the stage for further gains to 1.4350.
For today, USDCAD support is 1.4190 and 1.4170. Resistance is at 1.4250 and 1.4280.
Today’s Range: 1.4190-1.4240
Chart: USDCAD daily
Its My Way or the Highway
Tact and diplomacy used to be the default settings for governments and diplomats. Those are two traits that President Trump is missing, but they never hampered his ability to make money. Why should he start now? The man is nearly 79 years old, and perhaps he thinks he has to move fast to fulfill his agenda in case he starts acting like Joe Biden. Whatever the reason, Mr. Trump cannot be bothered with the traditional back-and-forth discussions that make up a negotiation. And that’s all due to his success with Colombia. Gustavo Petro’s attempt to defy Trump and reject deportees crumbled like a stale cookie.
On the weekend, Trump’s team told Mexican officials that they should slap tariffs on Chinese imports, and by doing so, they hinted that it was a way to avoid tariffs slated for March 4.
EURUSD
NY Open: 1.0480 Overnight Range: 1.0462-1.0528
EURUSD rallied then retreated in an active overnight session. The German election ended as the polls suggested, with the CDU/CSU getting 28.5% of the vote while the right-wing AfD party had its best performance ever and secured 20.8%. The SPD party won 16.4%. The new Chancellor will be Friedrich Merz. The German Ifo index was mixed but suggested that the economy is still stagnating. The EURUSD technicals are bearish below 1.0550. EURUSD trading should get volatile around the 10:00 a.m. option expiry window. There are reportedly $8.0 billion of 1.0450-1.0480 strikes maturing.
GBPUSD
NY Open: 1.2643 Overnight Range: 1.2626-1.2691
Sterling got a boost on EURGBP selling after the German election results, but the gains were erased just as quickly. Traders are looking ahead to speeches from three BoE officials today. The GBPUSD uptrend from mid-January is intact while prices are above 1.2470, and that level is guarded by support at 1.2557.
USDJPY
NY Open: 149.63 Overnight Range: 148.84-149.67
USDJPY traded defensively on increased expectations that the Bank of Japan will raise interest rates sooner rather than later. Trump’s latest tariff salvo aimed at China contributed to the sell-off due to safe-haven demand for yen. Traders concluded that when BoJ Governor Ueda said that he and the Prime Minister did not discuss yen strength and higher bond yields on Thursday, it meant officials were okay with further rate hikes.
AUDUSD
NY Open: 0.6365 Overnight Range: 0.6361-0.6393
AUDUSD popped and dropped in thinner-than-usual Asian markets due to the Japanese holiday. German election results underpinned AUDUSD initially, but expanding US tariffs on China reversed the move.
NZDUSD
NY Open: 0.5746 Overnight Range: 0.5739-0.5770
NZDUSD bounced around with price action influenced by ongoing tariff uncertainty and domestic data. New Zealand Q4 Retail Sales rose 0.9% compared to the forecast of 0.6%, with lower interest rates being credited for the gain.
USDMXN
NY Open: 20.4267 Overnight Range: 20.3477-20.4329
USDMXN traded erratically due to concerns around Trump’s tariff plans and the somewhat dovish outlook from Banxico. On the weekend, Trump urged Mexican officials to impose duties on Chinese imports, hinting that it could help Mexico avoid US tariffs.
BTCUSD
NY Open: 95,813 Overnight Range: 95,263-96,659
Bitcoin traded sideways and choppily due to uncertainty following the German elections and the ongoing turmoil around Trump tariffs, both real and threatened. Trump’s latest plan to prevent US firms from investing in industries that help China’s military also weighed on prices.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC fix: 7.1717 vs exp. 7.2495 (prev. 7.1696).
Shanghai Shenzhen CSI 300 fell 0.22% to 3969.72
BFF’s Putin and Xi Jinping spoke on the phone today and are though to have discussed US Russia talks.
China officially banned urban residents from buying rural home and banned retired officials from building house in rural land. No Escape to the Country for Beijing residents.
Sources: Yahoo Finance, Oanda, Investing.com,
