February 26, 2025
- US consumers are feeling nervous.
- Falling commodity prices drag down commodity currency bloc.
- USD opens mixed-CAD underperforms.
FX at a Glance
USDCAD: open 1.4345, overnight range 1.4292-1.4345, close 1.4317
Trump said he would impose 25% tariffs on all non-energy imports from Canada and 10% on energy imports effective March 4. The original date was February 4, and because Trump delayed it once, many Canadian’s including politicians, believed he would delay it again. Yesterday, Trump put that notion to rest when he tweeted “The tariffs are going forward on time, on schedule.”
USDCAD rallied from 1.4242 to 1.4320 on the news. Those gains were extended overnight when Trump ordered a new probe into copper imports. Canada supplies about 26% of refined copper to the US.
WTI oil consolidated yesterday’s losses in a 68.85-69.29 range following disappointing consumer US confidence data yesterday which raised fears of weaker demand in the face of Trump’s tariff barrage. It is just another oil negative on top of concerns about slowing Chinese demand, and increased production from the restart of the Iraq Turkey pipeline.
The US economic calendar has new home sales for January while the Canadian calendar is empty.
USDCAD Technicals
The intraday USDCAD are bullish supported by an uptrend channel bound by 1.4300 and 1.4370. A topside break targets 1.4420 while a move below 1.4300 targets 1.4270 on an hourly chart.
The Fibonacci study suggests the decisive move above 1.4270 will lead to a test of 1.4795 while the MACD (moving average convergence divergence) has crossed higher, supporting the argument for a USDCAD rally.
For today, USDCAD support is 1.4320 and 1.4290. Resistance is at 1.4370 and 1.4420
Today’s Range: 1.4310-1.4410
Chart: USDCAD daily
Cooking with Donnie
You have to break a few eggs to make an omelet” is an often-used proverb to justify doing harm in the pursuit of good. Upstanding citizens such as Joseph Stalin, Adolf Hitler, and Mao Zedong have used it (or a variation) to justify horrific actions.
President Trump is fully aware that his tariff actions will be harmful to his constituents. He said as much at the beginning of the month on Truth Social: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!), BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.” That may be true, but there is absolutely zero chance that Trump or his family experiences any pain.
EURUSD
NY Open: 1.0497 Overnight Range: 1.0487-1.0525 EURUSD inched higher in Asia, then retreated into the NY open following an uninspired overnight session. Prices were weighed down by weaker-than-expected German Consumer Confidence data and by dovish comments from ECB policymaker Yannis Stournaras. He said, “I don’t think that our next meeting is the right moment to discuss pausing. We are definitely still in restrictive territory.”
GBPUSD
NY Open: 1.2645 Overnight Range: 1.2635-1.2678 GBPUSD inched lower due to general US dollar weakness vs. Europe. Traders ignored warnings from the British Retail Council (BRC) that 160,000 part-time jobs were at risk over the next three years due to higher employment taxes announced in the budget.
USDJPY
NY Open: 149.50 Overnight Range: 148.63-149.62 USDJPY continued to trade with a negative bias but consolidated recent losses. The prospect of BoJ rate hikes and the recent drop in the US 10-year Treasury yield to 4.317% are weighing on prices. Japan’s Leading Economic Index was 108.3, lower than the forecast and last month’s 108.9 level.
AUDUSD
NY Open: 0.6318 Overnight Range: 0.6317-0.6354 AUDUSD traded sideways and in the same range as yesterday. Trump’s latest threat to slap tariffs on copper limited gains for resource-based economies as well as souring risk sentiment in Asia. The Consumer Price Index rose 2.5%, the same as last month but a tick below expectations.
NZDUSD
NY Open: 0.5700 Overnight Range: 0.5700-0.5733 NZDUSD traded defensively and with a negative bias due to the US-China trade war and the new tariff environment.
USDMXN
NY Open: 20.4550 Overnight Range: 20.4263-20.5079 USDMXN has traded with a bullish bias all week, with prices underpinned by the slight dip in inflation for the first half of February, which reinforced the dovish Banxico outlook. However, prices remain underpinned by Trump’s tariff threat.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC fix: 7.1732 vs exp. 7.2526 (prev. 7.1726)
Shanghai Shenzhen CSI 300 rose 0.87% to 3959.94.
Chinese government meetings that start next week (known as Two Sessions) will set out key economic goals including GDP and inflation targets.
US Trade Rep is proposing imposing port fees on Chinese built vessels and related operators. The SCMP wrote the fees are because the Americans believe that “China had used unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors.”
Sources: Yahoo Finance, Oanda, Investing.com,
