February 25, 2025
- Risk sentiment sours with chaotic White House messaging.
- US consumer confidence expected to fall.
- USD consolidating recent gains.
FX at a Glance
USDCAD: open 1.4268, overnight range 1.4240-1.4280, close 1.4261
USDCAD caught a bid yesterday and continued to climb throughout the session. The gains were extended overnight and its all due to Trump suggesting that he would not delay imposing tariffs on March 4. That news has to seriously annoy Canada’s Premiers, including Ontario’s Doug Ford who led the initiative to wine and dine US lawmakers and border state governors in an effort to get a pass for Canada. There is still hope but it is fading fast and that will certainly limit USDCAD downside.
WTI oil prices rose than fell in a 70.63-71.26 range. Rising trade war risks have more than offset support after Opec announced it would delay its planned oil production increase until July 2025. The US is increasing sanctions on Iran’s oil supply chain and sanctioned entities include UAE and Hong Kong based oil brokers and tanker operators.
BP is not concerned about an oil glut. The Financial Times is reporting that BP will announce it would scrap plans to reduce oil and natural gas production, and it will abandon its energy transition targets.
Trump’s tariffs may be taking a toll on Consumer confidence in the US. The consensus forecast is for a decline to 102.5 from 104.1,
USDCAD Technicals
The intraday USDCAD are bullish while prices are above 1.4240, looking for a break above 1.4280 to target 1.4320 then 1.4370. A move below 1.4240 negates the uptrend and suggests further 1.4140-1.4270 consolidation.
Longer term, the uptrend line from the end of September is intact while prices are above 1.4170. Fibonacci retracement analysis suggests that a decisive break above the 1.4270 (38.2%) will extend gains to 1.4470. The MACD index is turning positive and if it continues, it would also support a retest of 1.4470.
For today, USDCAD support is 1.4240 and 1.4190. Resistance is at 1.4280 and 1.4320.
Today’s Range: 1.4240-1.4330
Chart: USDCAD daily
Not Your Gramma’s Hoedown
“Swing your partner, do-si-do, promenade around you go.” This ain’t your Gramma’s hoedown, even if she is likely to be years younger than Donald J. Trump. A traditional square dance works because of the Dance Prompter’s clear instructions, but at President Trump’s hoedown, his chaotic orders and pronouncements have everyone spinning every which way without a clue as to where to step next.
UN observers were stunned when the US took Russia’s side on votes. The US sided with best friend North Korea in believing Ukraine started the war with Russia (perhaps by allowing Putin to bomb cities and infrastructure), and then the US declined to vote for a resolution condemning Russia’s action.
The big winner in America’s about-face is China. Xi Jinping looked southeast from Beijing and stared longingly at Taiwan, thinking, “Mine, all mine.”
Equity Traders Get Spooked
Wall Street closed flat to lower, and Asian equity indexes did not fare any better. Japan’s Topix lost 0.43%, while Australia’s ASX 200 fell 0.68%. European bourses are straddling flat, except for the UK FTSE 100 index, which is up 0.28%. S&P 500 futures are down 0.32%, while the US 10-year Treasury yield slipped to 4.34% from yesterday’s close of 4.39%.
EURUSD
NY Open: 1.0473, Overnight Range: 1.0457-1.0480
EURUSD appears to have gotten over concerns around the German election for now, and the price action is back to being dictated by divergent ECB and Fed monetary policy. ECB policymaker Martin Kazaks’ comments weighed on EURUSD as he continued to advocate for rate cuts. In addition, tariff threats and Trump’s backing of Russian aggression are other factors weighing on the single currency. German Q4 GDP fell 0.2% as expected. EURUSD remains bearish below 1.0535.
GBPUSD
NY Open: 1.2627, Overnight Range: 1.2606-1.2639
GBPUSD traded lower due to lingering bearish sentiment after BoE policymaker Swati Dhingra reiterated her position that UK rates should be slashed as opposed to gradually cut. She believes gradual cuts would act as a drag on the economy. Her views are well known, and today BoE Chief Economist Huw Pill is expected to counter her arguments. He is concerned about sticky inflation levels and believes rate cuts need to be gradual. The lack of actionable US data as we head into month-end suggests more range trading today.
USDJPY
NY Open: 149.79, Overnight Range: 149.20-150.30
USDJPY rallied early in Asia, but the move reversed due to increased negative risk sentiment, ongoing expectations for higher Japanese rates, and safe-haven demand for yen. The fall in the US 10-year Treasury yield helped to slow the losses.
AUDUSD
NY Open: 0.6326, Overnight Range: 0.6326-0.6357
AUDUSD traded defensively in Asia but recouped some of its losses in Europe. Australian CPI is expected to have ticked up to 2.6% y/y in January compared to 2.5%. If so, the modest increase compared to December would support the RBA’s cautious outlook for rates.
NZDUSD
NY Open: 0.5709, Overnight Range: 0.5708-0.5739
Yesterday’s low became the NZDUSD peak in quiet trading overnight, with prices weighed down by ongoing concerns about a US and China trade war.
USDMXN
NY Open: 20.4958, Overnight Range: 20.4237-20.4979
USDMXN climbed after Trump indicated he planned to go ahead with tariffs on March 4. Mexican officials are debating placing tariffs on Chinese imports. The US administration is urging such an action and hinting that it is a way to avoid tariffs. The issue is, “Can the Americans be trusted to keep their word?”
BTCUSD
NY Open: 88,405, Overnight Range: 87,283-96,243.
Bitcoin traders got spooked by increased global risk sentiment, sold BTCUSD, and triggered stop-loss selling on the break of 90,000.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC fix: 7.1726 vs exp. 7.2530 (prev. 7.1717)
Shanghai Shenzhen CSI 300 fell 1.11% to 3925.65
