February 21, 2025

  • Canada Retail Sales Retail Sales ex autos surge 2.5% in December
  • Trumps rare-earth demand from Ukraine may end the war.
  • USD slides modestly with improved risk sentiment.

 FX at a Glance

USDCAD: open 1.4196, overnight range 1.4169-1.4200 close 1.4175

The late Conn Smythe once said about building a champion hockey team that “if you can’t beat them in the alley, you can’t beat them on the ice.” Canadian are hoping that sentiment holds true for tariff wars as well, after Canada won an overtime thriller against Team USA.

That was until, soon to be ex-Prime Minister mocked Trump with a Tweet that said, “You can’t take our country — and you can’t take our game.”  Trump is not known for having a thick skin, and Trudeau’s comments may annoy him enough to impose 25% across the board tariffs in retaliation.

Canada’s December Retail Sales -ex autos surged 2.5% in December (forecast 1.8%) as Canadians took advantage of the HST/GST holiday on many items and bought lots of food and alcohol. The sales increase was at the expense of January’s numbers. StatsCanada is predicting headline January Retail Sales will rise just 0.4% m./m compared to the 2.5% in December.

Todays US data includes Michigan Consumer Sentiment and Existing Home Sales.

USDCAD Technicals

USDCAD has attempted to break below support in the 1.4140-60 area many times this week and failed but it will keep trying as long as prices are below 1.4220. A move above 1.4220 suggests further 1.4140-1.4360 consolidation.

 The longer term, outlook is unchanged. The USDCAD uptrend from October 7 is intact while prices are above 1.4160.

For today, USDCAD support is 1.4140 and 1.4110. Resistance is at 1.4220 and 1.4260.

Today’s Range: 1.4150-1.4230

Chart: USDCAD daily    

Securing Rare Minerals

Russia wanted another source of rare-earth minerals, and that was Ukraine. They invaded the country and spent billions of dollars to do so with little success. Then along came Trump. The President also wants rare-earth minerals from Ukraine but instead of Instead of using military force, he opted for extortion, disguised as diplomacy. Trumps plan is to stop supporting Ukraine unless Zelenskyy agrees to give the US 50% of all Ukraine rare-earth minerals. Trump’s actions only differed from Vito Corleone’s in that they didn’t include a horse’s head in Mr Zelenskyy’s bed.

However, Ukraine may be open to giving the US something less than the 50% demanded, and if so, it could pave the way to an end to the war.

EURUSD
NY Open: 1.0464 Overnight Range: 1.0463-1.0505
EURUSD popped and dropped on the back of mixed Eurozone PMI reports. EURUSD rallied this week after Trump comments lowered the risk of a US/China trade war, with pre-weekend profit-taking helping to spur gains. Nevertheless, the PMI data shows the Eurozone economy remains in contraction territory, which is hardly a reason to keep buying EURUSD. Traders remain cautious ahead of Sunday’s German election.

GBPUSD
NY Open: 1.2646 Overnight Range: 1.2642-1.2679
Sterling got a lift after January retail sales rose more than expected. Retail Sales rose 1.0% (forecast 0.6%) but were below the 2.8% result seen in December. However, mixed PMI data capped the rally. Manufacturing PMI was 46.4 (forecast 48.4, previous 48.3). S&P Global economist Chris Williams wrote that the data suggests business activity stalled.

USDJPY
NY Open: 150.36 Overnight Range: 149.29-151.74
USDJPY traded negatively in the early hours of Asia trading, then jumped from the session low to its peak following comments by Bank of Japan Governor Kazuo Ueda. Mr. Ueda said that the bank would intervene if JGB yields rise sharply. The 10-year JGB yield fell from 1.455 to 1.42. Japan’s core inflation rose 3.2% y/y in January, compared to expectations for a 3.1% increase.

AUDUSD
NY Open: 0.6386 Overnight Range: 0.6382-0.6409
AUDUSD is retracing some of yesterday’s gains following a mixed PMI report. The Economics Associate Director for S&P wrote: “February’s S&P Global Flash Australia PMI data outlined further improvements in private sector business conditions. That said, a fall in business sentiment to the lowest level since last October provided mixed signals for near-term economic performance.”

NZDUSD
NY Open: 0.5758 Overnight Range: 0.5754-0.5773
NZDUSD is the best-performing G-10 currency since yesterday’s NY open. Prices were supported by Trump’s previous comments about avoiding a trade war with China and by remarks from RBNZ Deputy Governor Christian Hawkesby that the country was well placed to withstand trade shocks. The New Zealand Trade deficit narrowed to -$7.22 billion in January from -$7.88 billion in December.

USDMXN
NY Open: 20.3474 Overnight Range: 20.2998-20.3591
USDMXN is trading defensively and looking to test support in the 20.0500 area due to broad-based US dollar selling pressure. Mexican Retail Sales data, released yesterday, fell 0.2% y/y in December, but much better than the -1.7% decline that was expected. Mexican Q4 GDP is expected to have risen 0.6% y/y.

FX high, low, open (as of 6:00 am ET)

China Snapshot

PBoC fix: 7.1696 vs exp. 7.2433 (prev. 7.1712).

Shanghai Shenzhen CSI 300 rose 1.26% to 3978.44

Chinese stocks get a boost after Alibaba revenue and profit beat estimates. Tech stocks were also bolstered by comments from the Finance Minister pledging to support technological innovation.

Sources: Yahoo Finance, Oanda, Investing.com,