Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3760-1.4010
Euro 1.6030-1.6280
Sterling 1.8500-1.8750
WTI Oil (opening level) $58.89
The CAD/USD is opening at 1.3885 ( 0.7202 )
Canada’s CPI data will be disclosed today.
The figures are unlikely to cause a long-term impact on USD/CAD volatility, unless there is a significant deviation from the market consensus.
CPI, which excludes the impact from seasonal food and energy prices, rose at a 2.9% yearly pace in October and November and will, most likely, remain well above the Bank of Canada’s 2% target rate for price stability in December, holding the Bank from cutting interest rates further.
Against this backdrop, the risk is on softer-than-expected Canadian inflation figures, which might provide the USD with additional support to retest the seven-week highs at 1.3930. A strong inflation report, on the contrary, might trigger speculation about a BoC rate hike in the mid-term, and trigger a deeper USD/CAD bearish correction. Key support, in that case, is at the 1.3650 area.
Headlines
· Trump proposed tariffs on eight European countries to force them to accept the US taking over Greenland, starting at 10% in February and potentially rising to 25% by June. European leaders may reconsider last year's trade deal, with Macron possibly activating the EU's anti-coercion instrument.
· EU leaders will hold an emergency meeting on Trump’s tariff threat in the coming days as member states weigh retaliatory measures including levies on €93 billion of US goods and use of the anti-coercion instrument, an official said.
· Trump said Friday that he wanted to keep Kevin Hassett where he is as the White House chief economic adviser. Hassett was widely considered the most likely next Fed Chair nominee to replace current Fed Chair Powell this May and one of the most likely to push for lower Fed policy rates.
· Iranian President Pezeshkian warned of war if Supreme Leader Khamenei is attacked, responding to US President Trump's comments calling for Khamenei's removal and criticizing him as "a sick man."
· The NAHB/Wells Fargo Housing Market Index dropped to 37.0 in January 2026, showing ongoing challenges in the US housing market. Builder sentiment declined across all areas, with significant price cuts and increased sales incentives being reported.
· U.S. industrial production rose 0.4% in December, exceeding expectations. Manufacturing output increased by 0.2%, while utilities surged 2.6%, driven by a 12% rise in natural gas. Mining output fell 0.7%. Capacity utilization reached 76.3%, still below the long-term average.
· China's economy expanded 4.5% last quarter from a year earlier, the slowest pace since the reopening from Covid lockdowns in late 2022. While industrial production held up well in December, retail sales and investment worsened more than forecast.
Key Points
· Equities: Equities were mixed: US ended flat on chip and central-bank chatter, Europe steadied despite luxury weakness; Hong Kong slipped on caution.
· Volatility: VIX futures up, trade rhetoric back in focus, SPX options price a ±1.0% move this week
· Digital assets: Crypto risk-off, but IBIT and ETHA flows remain resilient
· Fixed Income: US treasury yields jump as Hassett seen less likely next Fed Chair. New highs for Japan’s yields.
· Currencies: US dollar weakens Monday in Asia after initial strength on US treasury yields and geopolitical developments.
· Commodities: Gold and silver jump to record highs on Greenland tariffs threats