Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3750-1.4000
Euro 1.6090-1.6340
Sterling 1.8570-1.8820
WTI Oil (opening level) $58.81
The CAD/USD is opening at 1.3877 ( 0.7206 )
The US Dollar is trading lower across the board, weighed by fresh concerns about the Fed independence. The USD/CAD reversal, however, has remained limited, with downside attempts held above 1.3860 so far, which keeps the bullish trend from December lows intact.
Headlines
· Canada's unemployment rate rose to 6.8% in December from 6.5%, above the expected 6.6%, due to more people entering the job market. The number of unemployed grew by 73,000, and the labor force expanded by 81,000, raising the participation rate to 65.4%. Net employment increased by 8,200, led by a 50,200 rise in full-time jobs, which offset a 42,000 decline in part-time work.
· Federal Reserve Chair Jerome Powell said the Fed has been hit with Justice Department grand jury subpoenas threatening criminal charges linked to his June testimony on the Fed’s headquarters renovation. He said the move reflects an escalation of President Trump’s long-running feud with the central bank and pressure from the President to cut rates and vowed to continue doing his job “with integrity and in the public interest” despite the investigation.
· Japan’s Prime Minister Takaichi may consider calling snap elections to reclaim the LDP’s traditional parliamentary majority, a move that may come as early as February, as she may seek to capitalise on strong approval ratings.
· US job growth slowed further in December, with payrolls rising by 50,000, below both November’s revised 56,000 and the 60,000 forecast, as gains in food services, healthcare and social assistance were partly offset by a 25,000 drop in retail jobs. Revisions cut October–November payrolls by 76,000, leaving 2025 job growth at just 584,000, or an average 49,000 per month, down sharply from 2 million in 2024. Despite weaker hiring, the unemployment rate fell to 4.4% from 4.5% as unemployment dropped by 278,000, helped by a smaller labour force.
· On Iran, Trump said that the US is mulling potential options in response to reports of deadly crackdowns in the third week of nationwide protests but added that Tehran’s leadership also reached out to seek talks.
· US year-ahead inflation expectations stood at a near one-year low of 4.2% in January, unchanged from December, according to preliminary University of Michigan data. Meanwhile, the five-year outlook increased to 3.4% from December's 3.2%.
· US added 50K jobs in December, less than November's revised 56K and below the 60K forecast. Employment grew in food services (27K), healthcare (21K), and social assistance (17K), while retail lost 25K jobs. Federal employment and several other sectors saw little change. Revisions reduced October and November totals by 76K. For the year, payrolls increased by 584K, averaging 49K monthly, a drop from 2024's 2 million gain.
· US unemployment rate dropped to 4.4% in December from 4.5% in November, below forecasts. Unemployment decreased by 278,000 to 7.50 million, and employment rose by 232,000 to 163.99 million. The labor force shrank by 46,000, reducing the participation rate to 62.4%. The U-6 rate fell to 8.4% from 8.7%, indicating improved labor market conditions.
· Michigan's consumer sentiment in January increased to 54.0, surpassing forecasts and September levels, with gains among lower-income groups. It remains 25% below January 2025 as concerns over prices and the labor market persist. Year-ahead inflation expectations held at 4.2%, above last year's 3.3%, while long-term expectations rose to 3.4% from December's 3.2%.
Key Points
· Equities: Equities rise as US hits records on softer jobs, Europe rallies on miners and chips, and Asia steadies on China inflation.
· Volatility: VIX remains low, but CPI, bank earnings, and political headlines raise event risk; downside skew persists
· Digital Assets: Bitcoin and ethereum steady; IBIT and ETHA softer as macro caution weighs on listed vehicles
· Fixed Income: US treasury yield curve flattened Friday. Choppy trading in US treasury futures on Monday on threats to Fed independence.
· Currencies: USD weakened Monday on threats to Fed independence. JPY even weaker.
· Commodities: Gold and silver jumps on Fed independence concerns; crude holds firm; cocoa slumps