Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3750-1.4000
Euro 1.6030-1.6280
Sterling 1.8490-1.8740
WTI Oil (opening level) $58.30
The CAD/USD is opening at 1.3879 ( 0.7205 )
The Canadian labour market data for December is due for release this morning.
Signs of a slowdown in the job market are expected to be unfavorable for CAD, as they could boost the need of interest rate cuts by the BoC in the near term.
Apart from the job data, investors will also focus on Average Hourly Wages data, a key measure of wage growth. The wage growth measure rose at an annualized pace of 4% in November.
USD/CAD extends its two-week-long rally to near 1.3880 ahead of the US NFP data release today.
The 20-day Exponential Moving Average has turned higher to 1.3793, and the pair holds above it, preserving a near-term bullish bias.
The 14-day Relative Strength Index confirms improving momentum without overbought pressure.
Measured from the 1.4142 high to the 1.3646 low, the pair has risen to near the 50% Fibonacci retracement at 1.3894. A daily close above the same would extend the rebound toward the 61.8% Fibonacci retracement at 1.3952. On the contrary, the upside bias could fizzle out if it failed to break above 1.3894, which might lead to a correction toward the 23.6% Fibonacci retracement at 1.3763.
Headlines
· Protests in Iran escalated overnight amid an internet blackout, as thousands took to the streets across the country. The unrest potentially represents the most serious challenge in decades to the Ayatollah-led theocratic regime. Any collapse of the current government would carry significant geopolitical and energy-market implications.
· In December 2025, US one-year inflation expectations rose to 3.4%, while three- and five-year expectations remained at 3.0%. Inflation uncertainty increased, with price forecasts for gas, food, medical care, college, and rent declining. Labor market sentiment softened, showing a series low in job-finding, though income and spending expectations stayed stable.
· China is reportedly set to approve some NVIDIA H200 purchases this quarter, per Bloomberg sources. While the H200 is barred from state bodies and critical infrastructure, Beijing will permit its commercial use.
· The US trade deficit fell in October 2025 to $29.4 billion from September's $48.1 billion, beating the forecast of $58.1 billion. Tariffs altered trade flows, with imports down 3.2% to $331.4 billion driven by a notably drop pharmaceuticals and exports up 2.6% to $302 billion supported by a large increase in non-monetary gold exports.
· For the week ending January 3rd, US initial jobless claims rose by 8,000 to 208,000, close to the 210,000 forecast and below last year's average. Continuing claims increased by 56,000 to 1,914,000, exceeding expectations of 1,900,000, indicating slow hiring and steady firing.
· In Q3 2025, US nonfarm productivity rose 4.9%, beating the 3% forecast and up from 4.1% in Q2. Output increased 5.4% with hours worked rising 0.5%. Manufacturing productivity grew 3.3%, with output up 2.6% and hours down 0.7%. Year-over-year, productivity rose 1.9%, below the previous 3.3% increase.
· Trump is set to decide on a successor to Fed Chair Powell this month, according to Bessent, possibly around the Davos forum which begins on 19 January. The president told the NYT that he has made up his mind.
· Trump is directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds, a move he cast as his latest effort to bring down housing costs ahead of the November midterm election. One estimate showed the exercise could bring down mortgage rates by around 0.25% relative to US Treasuries.
Key Points
· Equities: Rotation hits US tech while defence and energy rally, Europe cools after records, Asia slips on China deflation worries.
· Volatility: Payrolls risk, event-driven hedging, calm surface, latent risk
· Digital assets: Bitcoin steady, ethereum softer, solana/xrp firmer, ibit resilient, etha lagging
· Currencies: JPY trades broadly weaker as the US dollar firms broadly ahead of US December jobs report.
· Commodities: Gold and crude gain on Iran tensions; broad gains steer the BCOM index to strong first week of trading.
· Fixed income: Yields rebounded in Japan and the US ahead of US December jobs report Friday.