January 23, 2025

  • Trump is speaking at Davos via video at 11:00 am EST.
  • Weekly jobless claims data rise but results were ignored.
  • USD opens with small gains-MXN outperforms.

 FX at a Glance

USDCAD open 1.4393, overnight range 1.4373-1.4411, close 1.4379

Yesterday’s USDCAD retreat ended abruptly when US Treasury yields started rising.  The Canada/US 10-year yield spread widened to -131 today from -120 yesterday.

USDCAD remains bid due to Trump’s  saying he would hike tariffs on Canadian imports by 25% starting February 1. The situation is exacerbated because Canada does not have a Prime Minister that speaks for 80% of Canadian’s and 100% of his own party and Trump appears eager to take advantage of the situation.

WTI oil prices traded quietly in a 75.01-75.88 range.  Direction is uncertain due to China’s economic malaise, uncertainty around tariffs, and Trumps vow to boost drilling.

USDCAD trading will get very messy at the 10:00am option expiry window as $1.7 billion of 1.4390-1.4505 strikes roll -off with another $1.5 billion of 1.4445-50 strikes maturing.

Canada Retail Sales , ex autos fell 0.7% m/m in November (forecast 0.1%) and the October number was revised to -0.1% from 0.1%). The data was likely depressed by consumers delaying purchases until the December sales tax 14 tax holiday came into effect.

US weekly jobless claims are expected to rise by 5,000 to 223,000..

USDCAD Technicals

The intraday USDCAD technicals are bullish above 1.4370, looking for a break above 1.4450 to extend gains to 1.4490, then 1.4510. A move below 1.4370 targets 1.4330.

Longer term, USDCAD is rangebound between 1.4300 and 1.4500 and that should contain price action until February 1.

For today, USDCAD support is 1.4370 and 1.4330. Resistance is 1.4420 and 1.4460.

Today’s Range: 1.4360-1.4460.

Chart: USDCAD 4 hour

All Trump, All the Time

You can forget about economic data, and you can forget about central bankers comments on monetary policy. US President Trump overshadows it all. He is notorious for blind-siding markets with pronouncements and declarations. He continues to flog the tariffs as a panacea for all of America’s ills but is prone to change the tariff levels at a whim. He is demanding that Putin make a deal to end the war in Ukraine, but Ukraine President Zelensky is worried that Trump will make a deal behind his back. Traders will be reluctant to get involved until after Trump address delegates at Davos today at 11:00 am EST.

Global Equity Markets Grind Higher

Asian equity indexes followed Wall Street’s lead and closed with modest gains. Australia’s ASX200 and the Hong Kong Hang Seng were the exceptions, losing 0.61% and 0.40% respectively.  European bourses are all slightly higher expect the UK FTSE 100 index which is flat.  S&P 500 index futures are down 0.12% while the US 10-year Treasury yield is at 4.634%.

EURUSD

NY Open: 1.0411
Overnight Range: 1.0391-1.0418

EURUSD is adrift and did not react to the news that Norway’s Norges Bank left rates on hold.  The ECB is widely expected to cut rates next week, but that news is reflected in the price.  Eurozone PMI data is due tomorrow.

GBPUSD

NY Open: 1.2320
Overnight Range: 1.2294-1.2327

Sterling consolidate recent gains in a quiet market.  Traders were reluctant to get involved due to a lack of fresh catalysts. UK BRC data for January suggests consumer sentiment for personal retail spending over the next 3 months fell to -9 in January from -3 in December.

USDJPY

NY Open: 156.40
Overnight Range: 156.21-156.75

USDJPY rallied yesterday on the back of a higher US 10-year Treasury yield but the risk that the BoJ raises rates by 25 bps tomorrow capped gains. Prices were also supported by news that Japanese investors bought a net $66 billion of overseas equities and funds in 2024, the most since 2025. Japan’s trade deficit  flipped to a surplus helped by a 2.8% rise in exports in December.

AUDUSD

NY Open: 0.6267
Overnight Range: 0.6256-0.6282

AUDUSD is off its worst levels from overnight thanks to Trump’s downgraded tariff level for China imports (10%), but Beijing is not impressed. The currency is also underpinned due to China’s latest efforts to stabilize its stock markets.

NZDUSD

NY Open: 0.5659
Overnight Range: 0.5650-0.5672

NZDUSD bounced around in a tight range in a quiet session supported by the latest Chinese economic support measures. Traders are awaiting fresh direction from US jobless claims or Trumps speech to Davos delegates.

USDMXN

NY Open: 20.4578
Overnight Range: 20.4357-20.5247

USDMXN is on the defensive partly because of Trump’s failure (so far) to levy tariffs as promised in his campaign. Instead, he has ordered a comprehensive review of the USMCA trade agreement. Mexican inflation rose 0.2% in the first half of January (forecast 0.29%).  Core CPI rose 0.28% compared to the forecast of 0.23%. USDMXN fell to its session low on the news.

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

China Snapshot

PBoC Fix: 7.1708 vs exp. 7.2826 (prev. 7.1696

Shanghai Shenzhen CSI 300 rose 0.16% to 3803.74.

China is attempting to support is stock market.  Yesterday the China Securities Regulatory Commission issued a directive to steady the stock market and clear bottle-necks for the introduction of mid-long term capital.  Bloomberg reports that  large State-owned insurers  were instructed to raise A-shares while listed companies encouraged to increase share buy-backs.

Chart: USDCNY

Sources: Yahoo Finance, Oanda, Investing.com, Google Finance