Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3560-1.3810
Euro 1.6090-1.6340
Sterling 1.8570-1.8820
WTI Oil (opening level) $60.92
The CAD/USD is opening at 1.3693 ( 0.7303 )
Speculation about a massive US-Japan joint intervention, following the US Federal Reserve’s request for US Dollar-Yen ratings to major banks on Friday, has kept investors away from the US Dollar over the last two days, wary of being crushed if two of the world’s largest Central banks decide to step in.
Beyond that, the escalating tensions between the US and Iran, after Trump affirmed that an “armada” of warships is heading toward the Middle East, have boosted crude prices more than 3% higher from Thursday's lows, amid concerns of supply disruptions. Crude is Canada's main export, and an increase in prices tends to boost the CAD.
Trump’s threat to raise tariffs on Canada by 100% in retaliation for a trade deal with China has failed to dent the Loonie’s strength. Earlier on Monday, Canada’s Prime Minister Mark Carney denied any interest in signing a free trade deal with Beijing, as Trump had suggested. The trade relationship between the two neighbours, however, remains highly uncertain, which is weighing on investors’ appetite for risk.
Headlines
· Sharp yen rally after US Fed appears to be coordinating intervention with Japan. Friday saw a steep and brutal rally in the Japanese yen after the Fed “checked” the rate for USD/JPY late Friday. This seemed an official recognition that JPY weakness has extended too far. USDJPY tumbled from highs above 159.00 to close Friday below 156.00 and followed through on Monday in Asia to trade below 154.00 at one point. More below in Currencies
· Senate Republicans plan to reject Democratic demands to split off Department of Homeland Security funding from a broader spending bill needed to avert a partial government shutdown. Democrats, led by Chuck Schumer, have vowed to block the package unless DHS funding is removed, raising the risk of a shutdown affecting multiple agencies from Jan. 31. The standoff has intensified after the fatal shooting of 37-year-old by a U.S. Border Patrol agent in Minneapolis during protests.
· Over the weekend, President Xi Jinping removed his top general Zhang Youxia amid allegations of corruption, while China’s military accused him of undermining the command authority of the President, suggesting that the power of the Chinese leader is behind the probe, one of the biggest in decades.
Key Points
· Equities: US ended mixed as Intel sank, Europe edged lower on sportswear warnings, while Asia rose on chips and steady policy
· Volatility: VIX remains subdued, but rising short-dated measures and mild downside skew reflect caution
· Digital assets: Bitcoin and ethereum stabilise, IBIT and ETHA outflows continue
· Fixed Income: Japanese government bonds mostly steady amidst profound yen moves, US treasury yields push lower
· Currencies: Massive yen rally Friday as signs of coordinated intervention. USDJPY selling weakens USD broadly.
· Commodities: Silver extends parabolic run toward USD 110; gold above USD 5,000; U.S. gas surges