– Fall out from Friday’s NFP continues
– China posts record trade surplus.
– US dollar hnags on to post NFP gains.
USDCAD: open 1.4438, overnight range 1.4412-1.4447, close 1.4432, WTI $77.02, Gold, $2680.06
The Canadian dollar is struggling despite Canada adding 90,900 jobs in December. That’s because the US nonfarm payrolls results were even better. Nevertheless, the robust headline jobs number led to many economists speculating that the Bank of Canada might pause rate cuts. That claim seems optimistic given that the job gains were mostly in the public sector.
The Canadian dollar is also undermined by the disorganized federal government. That leaves provincial leaders to address Trump’s 25% tariff threat on their own. Unsurprisingly, the premiers are focused on ensuring the burden falls on other provinces. Ontario flatly rejects imposing tariffs on auto or auto parts exports. Similarly, Québec refuses to target its forestry, energy, or aluminum industries. Meanwhile, all the premiers except Alberta’s Danielle Smith are eager to apply tariffs on crude oil exports, effectively shifting the impact to Alberta’s energy sector.
The Canadian dollar is getting a bit of support after the latest round of US sanctions on Russian oil lifted WTI from 73.90 on Friday to 77.48 overnight.
EURUSD opened in New York at 1.0200, trading within an overnight range of 1.0178-1.0250. The euro continues to struggle with “strong dollar syndrome.” The US economy’s resilience, supported by robust jobs data, suggests the Fed will maintain its current stance on interest rates. In contrast, the ECB faces a tougher battle as sticky inflation and rising gas prices keep policymakers focused on easing measures.
GBPUSD opened at 1.2135, after ranging between 1.2102 and 1.2210 overnight. Sterling remains pressured by rising gilt yields that evoke memories of the ill-fated Truss-Kwarteng budget. If the UK’s upcoming CPI, PPI, and Retail Sales figures disappoint, the sell-off could intensify.
USDJPY opened at 157.43, trading within a range of 157.01-157.97. Japanese markets were closed, but USDJPY slid ahead of the BoJ’s upcoming policy meeting on January 24, where a 25 bps rate hike is slightly favored.
AUDUSD opened at 0.6144, with an overnight range of 0.6131-0.6163. The pair continues to face pressure from rate differentials, as the RBA is widely expected to cut rates in February, while the Fed is not projected to ease until June. Additionally, concerns over China’s slowing economic growth weigh heavily on the Australian dollar.
There are no significant US or Canadian economic reports scheduled for release today.
