March 18, 2025
- Canada’s February inflation soars 2.6% y/y (January 1.9%)
- Traders awaiting results of Trump-Putin call
- USD continues to suffer from soft data
FX at a Glance
USDCAD: open 1.4286, overnight range 1.4269-1.4308, close 1.4288
USDCAD dropped then popped following today’s inflation data and as the dust settles, prices are close to unchanged from pre-data levels. Headline CPI rose 2.6% y/y and 1.1% m/m. The higher than expected results are due to the expiration of the GST/HST tax break which is a onetime event and therefore not evidence of a sustained inflationary move higher. The focus now shifts to tariffs and Trump’s plan to implement reciprocal tariffs on April 2.
Canada’s new Prime Minister Mark Carney and US President Trump are polar opposites on the climate change front and that greatly increases the economic downside for Canada. Carney is touting how his governments carbon pricing policies will help diversify trade. He claims that having a form of carbon pricing is necessary for trade with the EU and the UK. However, the UK and EU are moving away from those policies
It also puts him at odds with Trump who tweeted last night “After years of being held captive by Environmental Extremists, Lunatics, Radicals, and Thugs, allowing other Countries, in particular China, to gain tremendous Economic advantage over us by opening up hundreds of all Coal Fire Power Plants, I am authorizing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL.
WTI oil prices traded firmer in a 67.09-68.49 range due to hopes of renewed China demand and because of Trump’s threat to Iran.
USDCAD
The short-term technical outlook is bearish while prices are trading below 1.4360 and looking for a break below support in the 1.4270-80 area to extend losses to 1.4240. A break above 1.4360 targets 1.4440.
Longer term, USDCAD remains in the uptrend, but that trend ends with a sustained move below 1.4270 which would target 1.4200 then 1.4000.
For today, USDCAD support is 1.4270 and 1.4240. Resistance is at 1.4340 and 1.43800.
Today’s Range: 1.4270-1.4370
Chart: USDCAD daily
“Did Trump Declare War on Iran?”
Yesterday morning, President Trump took to his TruthSocial account to blame Iran for using Houthi rebels in Iran to attack Red Sea shipping. “Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of IRAN, and IRAN will be held responsible, and suffer the consequences, and those consequences will be dire! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA”
Is America about to attack Iran? If so, hopefully the outcome will be more successful than what they accomplished when they invaded Afghanistan and Iraq.
“Did Trump Declare Peace with Russia?”
President Trump said he would be speaking to Russian President Putin today about the war in Ukraine. He claimed that many elements of a final agreement have been agreed to but much remains. Russian media (Tass) reports that Trump is considering recognizing Crimea as Russian territory to pave the way to a deal and asking the United Nations to follow suit. That’s as audacious as Ukraine offering Alaska to Russia in exchange for a ceasefire.
Equity Markets Rally
Japan’s Topix rallied 1.29% on the back of the weaker yen and earlier news that Berkshire Hathaway was investing in Japanese Trading House companies. Australia’s ASX 200 couldn’t get any traction and closed with just a 0.06% gain. European bourses are higher, led by a 1.36% jump in the German DAX, but S&P 500 futures traders are less enamored, and the index is down 0.31%. Geopolitical jitters have fueled the recent jump in gold prices, which reached 3035.03 in NY today. The US 10-year Treasury yield is at 4.329%..
Geopolitical jitters have fueled the recent jump in gold prices, which reached 3035.03 in NY today. The US 10-year Treasury yield is at 4.329%..
New Vice Chair of Fed
President Trump announced on TruthSocial that “Michelle “Miki” Bowman will be the Federal Reserve’s new Vice Chair of Supervision. Miki has been serving honorably on the Fed’s Board of Governors since 2018 and has great expertise dealing with inflation, regulation, and banking. Our economy has been mismanaged for the past four years, and it is time for a change. Miki has the “know-how” to get it done.”
EURUSD
NY Open: 1.0949 Overnight Range: 1.0904-1.0955
EURUSD is near the top of its overnight band in anticipation of a successful spending vote by the government. Prices were also underpinned after the German ZEW Economic Sentiment index rose 25.6 points to 51.6 in March, attributed to hopes for the stimulus package. The risk of additional weak US economic data and a ceasefire agreement in Ukraine could drive EURUSD through 1.1000 resistance to 1.1200.
GBPUSD
NY Open: 1.3001 Overnight Range: 1.2968-1.3005
GBPUSD continues to benefit from broad US dollar weakness and speculation that the BoE will leave rates unchanged at Thursday’s monetary policy meeting. However, the upside faces a major hurdle: uncertainty around next week’s UK budget (March 26). Furthermore, the short-term technicals warn that the rally is becoming overbought.
USDJPY
NY Open: 149.78 Overnight Range: 149.13-149.90
USDJPY gained ground after weaker-than-expected US retail sales numbers raised the odds that the Fed would cut rates sooner than expected. At the same time, talk that Trump and Putin may have reached an agreement on the fate of Ukraine has led to some unwinding of safe-haven yen trades. The Bank of Japan meeting is tomorrow and policymakers are widely expected to keep rates unchanged due to global trade war uncertainties.
AUDUSD
NY Open: 0.6381 Overnight Range: 0.6367-0.6391
AUDUSD is riding the improved risk sentiment wave and is near the top of its overnight range. China’s latest program to boost domestic economic growth and talk of a ceasefire in Ukraine have helped lift prices.
NZDUSD
NY Open: 0.5825 Overnight Range: 0.5812-0.5832
NZDUSD is consolidating yesterday’s gains after US data improved the odds for a Fed rate cut alongside hope for a rebound in Chinese economic growth.
USDMXN
NY Open: 19.9511 Overnight Range: 19.9155-19.9933
Mexican markets were closed yesterday and USDMXN traders consolidated the recent losses overnight. Prices have since climbed to 20.0177 in early NY trading ahead of today’s US data and because of profit-taking.
FX high, low, open (as of 6:00 am ET)
China Snapshot`
PBoC fix: 7.1733 vs exp. 7.2364 (Prev. 7.1688)
Shanghai Shenzhen CSI 300 rose 0.27%% to 4007.72
Trump claims that China President Xi Jinping will visit him in Washington in the “not to distant future.”
Sources: Yahoo Finance, Oanda, Investing.com,
