Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3450-1.3700
Euro 1.6020-1.6270
Sterling 1.8440-1.8690
WTI Oil (opening level) $64.37
The CAD/USD is opening at 1.3573 ( 0.7367 )
The yen firmed broadly as the longest-dated Japanese government bonds found strong support on Prime Minister Takaichi’s move to reassure markets that she wants to build trust and does not want to fund a sales tax cut with JGB issuance. From an early Tuesday high in Tokyo of 156.29, USDJPY sold off to as low as 155.09 before finding support. EURJPY sold off from a 156.00 high to just below 185.00.
The USD sold off sharply and broadly Monday, in part inspired by China discouraging its banks from holding US treasuries but extending to weakness against all major currencies through the day as EURUSD rallied clear of 1.1900 and AUDUSD pulled all the way to almost 0.7100, poking at the highest levels since early 2023.
Headlines
· US one-year inflation expectations dropped to 3.1% from December's 3.4%. Slower rises are expected in gas, medical care, rent, and home prices. Three and five-year inflation expectations remain at 3%. Earnings growth rose to 2.7%, with unemployment at 41.9%.
· Fed Governor Miran supports a reduced central bank balance sheet but advises maintaining asset purchase options for downturns. Bloomberg highlighted his view that reducing the balance sheet won't hinder the Fed's crisis response, emphasizing the balance between reduction and policy flexibility.
· Australia’s Consumer Sentiment Index fell 2.6% in February 2026 to a ten-month low of 90.5, following January's 1.7% dip, marking a third consecutive decline due to inflation worries and recent policy tightening after a 25bp rate hike.
· The Chinese Yuan surged to its strongest since May 2023 after China advised financial institutions to limit their holdings of US Treasuries. A shift away from US sovereign debt reinforces global dollar diversification and could accelerate capital repatriation into Chinese assets, providing a tailwind for the yuan. Onshore and offshore yuan extended gains; the currency is up about 3% against the dollar since late September.
Key Points
· Equities: U.S. and Europe rose on an artificial intelligence tech rebound, while Asia surged as Japan hit records and Hong Kong recovered.
· Volatility: Calm surface, but key US data and heavy Treasury supply keep downside protection relevant
· Digital assets: Crypto drifts lower, but ETF resilience suggests caution rather than capitulation
· Currencies: USD weakened sharply Monday, JPY recovered broadly Tuesday on reassurance on fiscal stability from PM Takaichi.
· Commodities: Precious metal volatility eases while oil markets stay fixated on Iran
· Fixed Income: Longest-dated Japanese Government Bonds rally on reassurance from PM Takaichi, Google-parent Alphabet set to issue 100-year bonds, some of them in sterling.