January 19, 2026

USDCAD open: 1.3887, overnight range 1.3880-1.3918, close 1.3917

Overnight FX action was quiet ahead of today’s US market closure for Martin Luther King Day.

The initial FX reaction to Prime Minister Mark Carney’s China deals was to buy USDCAD. Traders feared Canada would face the wrath of Trump after inking memorandums of understanding with China for investment and lowering tariffs. However, pressure eased after Trump said that it was ok with him if Carney got a deal with China and USDCAD dropped to its session low.

It is not likely to last. Trump will change his mind (he always does) and Carney is reportedly going to send Canadian troops to Greenland in a show of support. Can you say “tariffs?”

WTI oil traded softer in a 58.57-59.56 band on diminished fears of a US missile strike on Iran in retaliation for that government’s treatment of protestors, even though ICE is shooting American protestors.

Canada’s December inflation data fell 0.2% (forecast -0.3% m/m) a tick higher than the 0.1% seen in November. The year over year result was 2.4% (forecast 2.2%, previously 2.2%) but the results were ignored. Later today, the Business Outlook summary is released.

USDCAD Technical Outlook

The intraday USDCAD technicals are neutral to slightly bearish in a 1.3840-1.3940 band although there is plenty of support between 1.3805 and 1.3830.  A break above 1.3920 turns the technicals bullish.

The medium-term techncials are trapped bouncing between the 200-day moving average at 1.3839 and the 100 day at 1.3908.  USDCAD needs to decisively breach 1.3950 to target 1.4050 while a drop below 1.3810 puts 1.3650 in play.

For today, USDCAD support is at 1.3860 and 1.3830. Resistance is at 1.3920 and 1.3950.
Todays Range 1.3840-1.3920.

The Petulant President

It is no secret that Trump has a very thin skin and reacts very poorly to perceived snubs. And that is the real reason for his lust to annex (invade) Greenland while killing NATO.  He said as much in a letter to the Norwegian Government. Reuters reports he wrote “Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace, although it will always be predominant, but can now think about what is good and proper for the United States of America.”

Trump has proved time and again that his word is not a bond, just a ruse. After announcing “the greatest ever” trade and tariff deals with countries throughout Europe since April 1, Trump announced a new 10% tariff on eight European countries (Denmark, Sweden, Norway, Germany, France, Holland and the UK), which rises to 25% on June 1. It is punishment for those countries sending troops to Greenland to support Greenland’s sovereignty.

Trump is planning on attending Davos this week and he is guaranteed to receive a frosty reception.  If so, the end of NATO is nigh.

Taking Stock

Asian equity markets suffered a bout of risk aversion and closed lower. Hong Kong’s Hang Seng Index dropped 1.05%, Australia’s ASX 200 lost 0.33% and Japan’s Topix closed flat.

As of 5:30 am PT, European bourses are deep in negative territory, led by a 1.67% drop in the French CAC-40. The German DAX fell 1.47% and the UK FTSE 100 is down 0.66%. S&P 500 futures have dropped 1.15%, the US Dollar Index is 99.17, the US 10-year Treasury yield is 4.249%, and gold (XAUUSD) is 4670.60.

EURUSD

EURUSD traded defiantly in the face of Trump’s latest hostility and rose from 1.1578 to 1.1641. French President Macron is demanding that the EU invoke its ACI (anti-circumvention instruments to prevent companies from evading EU trade or sanction measures). In addition, EU officials are discussing a plan to levy €93 billion in tariffs against the US.

GBPUSD

GBPUSD rallied in a 1.3344–1.3415 range. UK Prime Minister Keir Starmer summed up Trump’s latest tariffs neatly, saying, “Applying tariffs on allies for pursuing the collective security of NATO allies is completely wrong.” Trump does not care, and his sycophants in Cabinet agree. Traders are looking ahead to UK employment numbers tomorrow and inflation data on Wednesday.

USDJPY

USDJPY traded in a 157.43–158.17 range, with the low seen in Asia due to yen demand from rising risk aversion. The rally occurred after Prime Minister Sanae Takaichi called a snap election for February 8 and, in a blatant bribe, proposed cutting sales tax on food from 8% to 0% for two years.

AUDUSD

AUDUSD traded with a bit of a bid, rising from 0.6668 to 0.6706 due to supportive Chinese economic data and higher commodity prices.

USDMXN

USDMXN largely ignored the latest tariff drama but drifted higher in a 17.0695–17.6681 range. The relentless USDMXN sell-off since April 2025 may pause ahead of support in the 17.5700–17.5900 area until there is more clarity in the US interest rate outlook.

China

PBoC Fix: 7.0051 vs exp. 6.9689 (prev. 7.0078)
Shanghai Shenzhen CSI 300 rose 0.05% to 4734.46
Unemployment rate 5.1% in December vs previous 5.1%. GDP grew 5.0% y/y in 2025, exactly as targeted by Chinese leadership.
Industrial production rose 5.2% y/y, industrial capacity increased to 74.9 from 74.4, and retail sales rose 0.9% y/y.
The PBoC is expected to leave rates unchanged at tomorrow’s meeting. Domestic equity markets struggled after officials pushed back against “excessive speculation,” preferring investors to target the long term.

FX Open High Low

FX Heat Map (6:00 am)

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview