February 18, 2025
- Trump wooing Putin, ignoring Ukraine, and upsetting the EU.
- Canada January CPI rose 1.9% y/y while BoC Core-CPI rose 2.1% y/y
- USD opens mixed in choppy, directionless trading.
FX at a Glance
USDCAD: open 1.4193, overnight range 1.4179-1.4209, close 1.4184
Monday: open 1.4180, overnight range 1.4160-1.4196, close 1.4185
USDCAD traded sideways since Friday, but it is maintaining its bearish bias. The threat of a U.S.-Canada trade war should limit USDCAD losses. Canada is the largest supplier of steel and aluminum to the U.S., and the 25% tariff increase could put a sizeable dent in the Canadian economy if Trump sticks to his plan to impose them on March 12.
Canadian inflation data rose a tad more than expected mainly due to increased prices for gasoline and natural gas. The GST/HST holiday sparked a 5.1% drop in prices for food from restaurants. The BoC’s measure of Core CPI popped to 2.1% from 1.8%. Nevertheless, the data won’t alter the outlook for another BoC rate cut on March 12.
WTI oil prices traded in a 71.08-72.03 range. Reports that the Trump administration is cracking down on Iranian oil shipments to China are offset by ongoing expectations for sluggish Chinese demand due to slow economic growth.
USDCAD Technicals
The intraday USDCAD technicals are bearish below 1.4240 and looking for a break below 1the 1.4150 area to extend losses to 1.4040. A break above 1.4240 suggests 1.4200-1.4440 consolidation.
Longer term, the USDCAD uptrend line from September 2024 remains intact while prices are above 1.4140,
For today, USDCAD support is 1.4170 and 1.4150. Resistance is at 1.4240 and 1.4270.
Today’s Range: 1.4170-1.4240
Chart: USDCAD daily
“Peace in Our Time”
Once again, history proves that it repeats. President Trump’s plan to end the Russia-Ukraine war might be inspired by an abridged version of Neville Chamberlain’s autobiography—specifically, the chapter where he hands over the Sudetenland to Hitler in a failed bid to prevent WWII. Bazinga! The Trump Administration appears set on ending Russia’s war in Ukraine by handing Putin all the Ukrainian territory his forces currently occupy. And, just like in 1938, the country being carved up isn’t part of the negotiations—Czechoslovakia was sidelined in Chamberlain’s talks with Hitler, and now Ukraine is excluded from U.S.-Russia discussions in Saudi Arabia.
EURUSD
NY Open: 1.0463, Overnight Range: 1.0452-1.0487.
EURUSD is juggling a lot of moving parts, including the risk of U.S. tariffs, the prospect of peace between Russia and Ukraine, Trump’s disdain for the NATO status quo, and the dovish ECB interest rate outlook. The German and Eurozone ZEW surveys surged in February, rising to 26 from 10.3, and 24.2 from 18, respectively. The U.S.-Russia talks overshadowed the results.
GBPUSD
NY Open: 1.2600, Overnight Range: 1.2591-1.2625
GBPUSD chopped around in a 1.2578-1.2636 range since closing on Friday at 1.2587. Prices are supported by the better-than-expected UK unemployment rate, which remained unchanged at 4.4% (forecast 4.5%), and employment rose 107,000 (three months to December) compared to 35,000 previously. Analysts do not expect today’s data to have any bearing on the BoE’s policy of gradual rate cuts.
USDJPY
NY Open: 151.79, Overnight Range: 151.79-152.24
USDJPY consolidated Friday’s losses in a fairly narrow range. Q4 GDP rose higher than expected at 2.8% q/q (forecast 1.00%), which supported the case for BoJ rate hikes and helped to cap gains.
AUDUSD
NY Open: 0.6355, Overnight Range: 0.6334-0.6368
AUDUSD traded sideways in an uneventful session despite the RBA cutting the OCR rate to 4.10% from 4.35%. The move was well-telegraphed and justified by RBA Governor Michele Bullock, who said that underlying inflation was moderating and that the labor market remained strong. Ms. Bullock noted that it was still too early to declare victory in the inflation fight.
NZDUSD
NY Open: 0.5707, Overnight Range: 0.5704-0.5739
NZDUSD traded uneventfully, but gains were hampered by AUDNZD demand and by firmer U.S. Treasury yields ahead of an expected 50 bp rate cut by the RBNZ tomorrow.
USDMXN
NY Open: 20.2668, Overnight Range: 20.2210-20.3361
USDMXN fell due to weaker U.S. retail sales data and broad U.S. dollar selling pressure. However, the ongoing threat of U.S. tariffs will limit losses.
BTCUSD
NY Open: 95,866, Overnight Range: 95,241-97,163
Bitcoin traded sideways, with topside gains limited due to continued fears of governments liquidating seized cryptocurrencies, specifically the FTX repayment program. There is a bit of support being derived from news that Texas is holding a public hearing to evaluate the prospect of establishing a Bitcoin reserve fund.
FX high, low, open (as of 6:00 am ET)
China Snapshot
PBoC fix: 7.1702 vs exp. 7.2617 (prev. 7.1706).
Monday fix: 7.1697 vs exp. 7.2538 (prev. 7.1702).
Shanghai Shenzhen CSI 300 fell 0.88% to 3912.78
President Xi Jinping met with Chinese entrepreneurs and tech leaders and seemingly endorsed their efforts. He said he would abolish unreasonable fines, and many investors saw the meeting as Xi validating the private sector. Hong Kong’s Hang Seng index soared and closed with a 11.59% gain.
Sources: Yahoo Finance, Oanda, Investing.com,
