February 19, 2025

  • Trump talking about more tariff announcements on April 2.
  • FOMC minutes take a back seat to politics
  • USD trading with a small bid in early NY.

 FX at a Glance

USDCAD: open 1.4205, overnight range 1.4176-1.4215 close 1.4198

USDCAD inched higher along with most of the other G-7 major currencies thanks to Trump’s latest tariff tirade.

Yesterday’s Canadian inflation report was a non-event.  The GST/HST holiday skewed the results somewhat, but it didn’t do anything to change the outlook for domestic rates.  They should continue to fall, but the lingering tariff threat is a concern.

WTI oil prices climbed from 71.70 to 72.56, partly because the EU and US are planning to increase pressure on Russia’s “shadow fleet” that continues to deliver crude. Will

The FOMC minutes should not cause much of a stir as it is President Trump and his tariff announcements that are driving markets.  The lack of detail prevents the FOMC and other policymakers from being able to formulate policy because they do not know who, how or what will be impacted.

US data includes Building Permits, and Housing Starts.  The Canadian calendar is empty.

USDCAD Technicals

The intraday USDCAD technicals are unchanged from yesterday.  They are bearish below 1.4240 and looking for a break below the 1.4150 area to extend losses to 1.4040.  A break above the 1.4240-50 area suggests 1.4200-1.4440 consolidation.

Longer term, USDCAD Bollinger bands suggest a modest negative bias while prices are below 1.4250.  A move above 1.4250 suggests further gains to 1.4360.  support is at 1.4140.

For today, USDCAD support is 1.4180 and 1.4150. Resistance is at 1.4250 and 1.4290.

Today’s Range: 1.4190-1.4270

Chart: USDCAD daily    

Trump and Tariffs

President Trump got aboard his tariff bus again yesterday and said he was likely going to put 25% tariffs on pharmaceutical, semiconductor, and auto imports. He thinks that the tariffs will encourage those businesses to relocate manufacturing plants to the U.S. As usual, details were vague, but markets were unsettled nevertheless.

Peace Talks Need to Involve Both Combatants

Trump may have a plan to stop the war in Ukraine, but he failed to include Ukraine in the discussions. Ukraine President Volodymyr Zelensky was irked, as were EU officials. Trump was not. He said, “I hear that they’re upset about not having a seat. Well, they’ve had a seat for three years and a long time before that. This could have been settled very easily.” Then he accused Ukraine of starting the war: “You should have never started it. You could have made a deal.” Is Trump having a Joe Biden moment? Is the U.S. being run by another man with diminishing faculties? It is starting to look like it.

Equity Rally Pauses

The S&P 500 posted a fresh intraday high yesterday, but S&P 500 futures are slightly lower this morning (-0.13%). Trump’s latest tariff threat spooked Asian traders, and equity indexes in that region closed with losses. European bourses are in negative territory, led by a 0.97% drop in the German DAX. The U.S. 10-year Treasury yield ticked up to 4.571% from 4.55% at yesterday’s close.

EURUSD

NY Open: 1.0423, Overnight Range: 1.0419-1.0462
EURUSD is trading defensively due to Trump’s latest threat to impose 25% tariffs on automobiles and due to uncertainty surrounding the U.S. and Russia talks to end the war in Ukraine. The EU is seriously miffed that they did not have a seat at the table and are even more concerned that the U.S. is no longer a reliable ally.

GBPUSD

NY Open: 1.2592, Overnight Range: 1.2584-1.2641
GBPUSD gave up Asian gains and is trading at its overnight session low in NY. January CPI rose more than expected (actual 3.0% y/y vs. forecast 2.8% and 2.5% in December), while PPI data was mixed. The Retail Price Index was 3.6%, worse than expected but a tick higher than in December. Today’s results further reduced the odds that the BoE cuts rates in March.

USDJPY

NY Open: 151.74, Overnight Range: 151.55-152.32
USDJPY traded sideways within the confines of its recent range, although the downtrend from the beginning of the year remains intact while prices are below 153.70. Prices were weighed down by disappointing data. Exports fell on reduced demand from China, and machinery orders rose 4.3%, less than the expected 6.9%.

AUDUSD

NY Open: 0.6353, Overnight Range: 0.6342-0.6371
AUDUSD rallied in Asia but stalled at the European open, and prices dropped back to the NY closing level of 0.6353. Nevertheless, it remains close to its 2025 peak despite Trump’s latest 25% tariff ramblings. The Westpac wage price index rose 0.7%, compared with 0.9% in December and the forecast of a 0.8% gain.

NZDUSD

NY Open: 0.5716, Overnight Range: 0.5676-0.5732
Oops, I did it again. RBNZ Governor Adrian Orr performed his best Britney Spears imitation and cut the Overnight Cash Rate (OCR) by 50 bps to 3.75%, the third 50 bp rate cut since October. Policymakers justified the move due to inflation being near the midpoint of the 1-3% target while economic activity remained subdued. The forward guidance was dovish, as the statement indicated scope for further cuts, although likely just in 25 bp increments.

USDMXN

NY Open: 20.2680, Overnight Range: 20.2010-20.2776
USDMXN is trading with a modestly bearish bias below 20.3700, but the downside found support after Trump started talking about 25% tariffs on automobiles. Price action is likely to be muted ahead of the release of the FOMC minutes from January 29.

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

China Snapshot

PBoC fix: 7.1702 vs exp. 7.2617 (prev. 7.1706).

Shanghai Shenzhen CSI 300 rose 0.70% to 3940.16

China Foreign Minister Wang Yi met with Bolivia Foreign Minister Celinda Lunda. He told her that China was willing to work with Bolivia to elevate their strategic partnership. He said that Latin America belongs to the people and is not any country’s “backyard.”  He failed mention that the same sentiment does not apply to Taiwan.

Sources: Yahoo Finance, Oanda, Investing.com,