March 13, 2025
- US government faces shutdown on Saturday
- IEA predicts 2025 global oil supply will outstrip demand by 600,000 barrels/day
- USD consolidating yesterday’s losses in narrow ranges.
FX at a Glance
USDCAD: open 1.4370, overnight range 1.4360-1.4405, close 1.4369
The Bank of Canada cut rates by 25 bps to 2.75% yesterday and issued a very cautious outlook. Both results were expected as the focus remains on Trump and his trade war.
Ontario Premier Doug Ford was invited to Washington by Howard Lutnik after Ford slapped a 25% surcharge on Ontario’s electricity exports to the US. Trump nearly had a heart attack because someone defied him and threatened to shut down Canada’s entire auto industry. Then someone must have pointed out to the buffoon that he would also shut down the US auto industry as well.
These talks are not going to end well. Ford said he suspended the surcharge after Lutnik offered an olive branch in the form of face-to-face discussions in Washington. Trump’s version is that his threat scared Ford silly, and he quickly backed down. Lutnik changed his tune when speaking to the US media, saying Trump’s threat was to “break some guy in Ontario.” Truth is the first casualty in a trade war. In addition, there is no truth to the rumor that Lutnik has applied to change his name to “LapDog.”
The US trade war on the world will be the hot topic when the G-7 Foreign Ministers meet in Charlevoix, Quebec, today.
WTI oil prices retreated to 67.12 from 67.94 after the Energy Information Agency (EIA) warned that 2025 global oil supply will exceed demand by 600,000 barrels/day. And that’s a best-case scenario. The oversupply could increase by another 400,000 b/day if OPEC and Russian production continue to exceed quotas. Prices are also under pressure from Trump’s tariffs, which are expected to weaken global demand.
Mark Carney is expected to be sworn in as Prime Minister on Friday, and the latest Leger Poll suggests that if an election were held today, the Liberals and Conservatives are tied. Leger is also known for having a Liberal Party bias, so the poll is suspect.
There are no top-tier Canadian economic reports today.
USDCAD
The short-term USDCAD technicals are bearish, with the move below 1.4400 setting the stage for a test of support in the 1.4330-40 area. Momentum indicators suggest USDCAD is approaching oversold levels. A break above 1.4405 would extend gains to 1.4460.
The medium-term outlook is bullish, and a move above 1.4400 negates the short-term selling pressure. The momentum indicators are neutral to slightly bullish.
For today, USDCAD support is 1.4340 and 1.4310. Resistance is at 1.4405 and 1.4440.
Today’s Range: 1.4340-1.4440
Chart: USDCAD daily
S&P 500 Futures Fading Yesterday’s Inflation Bump
Wall Street’s S&P 500 index closed with a 0.49% gain yesterday after headline and core CPI numbers were lower than expected. Sentiment soured overnight, and S&P 500 futures are down 0.41% after weekly jobless claims fell 2,000 to 220,000 (forecast 225,000). In addition, US Producer Price Index rose 3.2% y/y (forecast 3.3%, January 3.5%, while Core-PPI rose 3.4% y/y (forecast 3.5% y/y vs. 3.6% previously).
It is all noise. The uncertainty around Trump’s tariffs has investors heading for the hills. The self-described “tariff man” has knocked the S&P 500 down 6.63% and the NASDAQ down 9.63% since he occupied the Oval Office.
Government Shutdown Looms
Senate Minority Leader (Democrat) Chuck Schumer suggested that the Democrats would thwart Republican plans to fund the government to avert a shutdown on Friday. Republicans do not believe he can (or will) do it, as it would hurt federal employees who are already suffering at the hands of DOGE. The uncertainty is sidelining many traders.
EURUSD
NY Open: 1.0880, Overnight Range: 1.0860-1.0898
EURUSD is trading defensively due to domestic and international concerns. The German parliament is debating a plan to ease debt rules to ramp up defense spending to the tune of €500 billion. It is not a slam-dunk deal. EURUSD is also being pressured by concerns about whether Russia will agree to the US-planned ceasefire. Eurozone industrial production was a tad better than expected but not a factor.
GBPUSD
NY Open: 1.2960, Overnight Range: 1.2942-1.2974
GBPUSD traded sideways ahead of Friday’s data dump, which includes Manufacturing PMI, Industrial Production, trade balance, and January GDP. The UK RICS Housing Survey was weaker than expected, rising just 11 compared to 21 in January. The weakness was blamed on concerns about emerging inflation pressures.
USDJPY
NY Open: 148.14, Overnight Range: 147.58-148.37
USDJPY traded with a modestly negative bias, undermined by reports that the BoJ is reluctant to intervene in the bond market despite the recent rise in yields. BoJ Governor Ueda said that although inflation is below 2.0%, he expects it to recover as the economy improves.
AUDUSD
NY Open: 0.6291, Overnight Range: 0.6284-0.6334
AUDUSD rallied in Asia, then retreated in Europe, and opened in NY little changed from yesterday. The deterioration in global risk sentiment due to Trump tariffs is capping AUDUSD gains.
NZDUSD
NY Open: 0.5708, Overnight Range: 0.5697-0.5742
NZDUSD mirrored Aussie moves, but gains remain limited due to trade and geopolitical tensions.
USDMXN
NY Open: 20.1751, Overnight Range: 20.1682-20.1989
USDMXN consolidated yesterday’s losses after US CPI raised hopes that the Fed would lower rates more than previously expected. The Trump administration’s willingness to discuss tariffs with Ontario’s Premier raised hopes that the tariffs on Mexican exports would just be temporary.
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.1728 vs exp. 7.2439 (Prev. 7.1696)
Shanghai Shenzhen CSI 300 fell 0.40% to 3911.58
Sources: Yahoo Finance, Oanda, Investing.com,
