Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3510-1.3760
Euro 1.6030-1.6280
Sterling 1.8540-1.8790
WTI Oil (opening level) $62.20
The CAD/USD is opening at 1.3637 ( 0.7333 )
CAD weakened against the USD on Friday, as reaction to concerns over the Federal Reserve’s independence eased following Trump’s decision to nominate a former Fed Governor as the next Fed Chair.
Concerns over the Fed’s independence were a key driver behind the US Dollar’s recent slide to a four-year low. Investors have taken some comfort from the prospect of Kevin Warsh, who is widely viewed as a more institutional candidate and likely to preserve the central bank’s independence.
Given Trump’s repeated calls for lower interest rates, markets had feared that his choice for the next Fed Chair could tilt US monetary policy onto a more politically driven and dovish path. While Kevin Warsh has recently aligned himself with Trump’s calls for more aggressive rate cuts, he is traditionally known as an inflation hawk, leading investors to view him as less supportive of deep and rapid interest rate reductions. Concerns over the Fed’s independence have not fully faded. Trump has continued to publicly criticise Fed Chair Powell for not cutting interest rates and has also attempted to remove Fed Governor Lisa Cook, a case that is now before the US Supreme Court. In addition, reports of a recent criminal investigation involving Powell have kept political risk around the central bank in focus.
The US Dollar also finds support from hotter-than-expected Producer Price Index (PPI) data. Headline PPI rose by 0.5% MoM in December, accelerating from 0.2% in November and beating market expectations. On an annual basis, producer prices increased by 3.0%, matching the previous reading and coming in above forecasts of 2.7%.
Core PPI surprised even more to the upside, rising 0.7% MoM in December, well above expectations of 0.2% and the prior 0.0% reading. On a yearly basis, core producer prices climbed to 3.3% from 3.0%, also exceeding market estimates of 2.9%.
The US Dollar Index, which tracks the USD’s value against a basket of six major currencies, is trading around 97.20, rebounding after hitting a four-year low near 95.56 earlier this week.
On the Canadian side, data showed that the economy stalled in November, with GDP flat on the month after contracting by 0.3% previously and missing expectations for a 0.1% increase, offering little support to the CAD. And oil is down again today, which is not supporting the CAD as well.
Headlines
· Trump nominated Kevin Warsh to replace Fed Chair Powell, a choice seen by markets as supporting a more disciplined and cautious approach to Fed policy easing.
· US producer prices rose 0.5% in December, surpassing expectations. Services rebounded and nonferrous metals surged, while diesel fell. Core PPI climbed 0.7%. Annual inflation remained at 3%, and core inflation increased to 3.3%, both above forecasts.
· China's Manufacturing PMI dropped to 49.3 in January 2026 from 50.1, missing expectations. Factory activity weakened with contracting new orders, slower output, and declining foreign sales. Input prices rose faster, selling prices increased again, and business confidence hit a six-month low.
· Gold and silver extended their historic slump with stocks, as assets that had performed the best in January came under intense selling pressure following Friday’s dramatic market reversal. Bitcoin, the laggard throughout January slumped further to a ten-month low near USD 75,000 with focus on large positions held by Micael Saylor’s Strategy Inc. and investors through ETFs.
· Taylor Rehmet, a Democratic candidate for a Texas state Senate seat in a conservative district near Dallas, won a runoff election on Saturday by more than 11 points following a 17-point loss in 2024, marking the first time since 1983 that a Democrat has held that state Senate seat. He overcame late intervention from Donald Trump in a race widely viewed as a bellwether for this year’s midterm elections.
Key Points
· Equities: U.S. stocks fell on higher yields, Europe rose on better growth data, Asia pulled back after a strong run.
· Volatility: VIX stable but metals sell-off adds stress, macro data and payrolls ahead
· Digital assets: Crypto remains under pressure, BTC and ETH near multi-month lows
· Currencies: US dollar has bounced back after profound recent weakness in the wake of Trump nomination Kevin Warsh as next Fed Chair.
· Commodities: A historic rally across metals has turned into an equally historic rout, with silver suffering a 37% collapse and gold trading down 18% since Thursday.
· Fixed Income: US treasuries act as a kind of safe haven as precious metals crash, risk sentiment weakens.