Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3760-1.4010
Euro 1.6060-1.6310
Sterling 1.8570-1.8820
WTI Oil (opening level) $60.66
The CAD/USD is opening at 1.3882 ( 0.7204 )
USD/CAD pair oscillates in a narrow band below the 1.3900 mark .
The US Consumer Price Index is due later today and will be followed by the US Producer Price Index on Wednesday. Heading into the key data risk, the USD regains positive traction following the previous day's decline and turns out to be a key factor supporting the USD/CAD pair. However, concerns about the Fed's independence cap any further USD gains. Moreover, the recent rise in Crude Oil prices underpins the commodity-linked CAD and acts as a concern for the currency pair.
From a technical perspective, the USD/CAD pair trades beneath the 50-day Simple Moving Average, which is sloping downward and maintaining a bearish tilt. The said SMA is pegged near the 1.3890 region, and rebounds remain capped by it. The Relative Strength Index stays above the midline, which reinforces a mildly bullish tone without reaching overbought.
Measured from the 1.4134 high to the 1.3646 low, Fibonacci retracements act as overhead barriers, with the 50% at 1.3890 and the 61.8% at 1.3948 capping rallies. A daily close above 1.3948 could expose the 78.6% retracement at 1.4030, whereas repeated failure below 1.3890 would keep the pair consolidating under resistance. Overall, momentum has improved, but the declining SMA and clustered Fibonacci levels constrain the advance, and bulls would need a decisive break of these overhead retracements to extend gains.
Headlines
· Trump imposed a 25% tariff on any country doing business with Iran, effective immediately, while weighing Iran’s offer for nuclear diplomacy even as he leans toward authorizing new military strikes.
· Japan's bank lending grew by 4.4% in December, beating expectations and marking the fastest rise since April 2021. Total loans reached ¥660.6 trillion, with major banks leading the charge at 5.7%, regional banks at 4.1%, and shinkin banks at 1.4%, reflecting varied credit demand across sectors.
· UK retail sales grew 1% year-on-year in December, the weakest in seven months due to persistent cost pressures, compared to 3.1% in the previous year but above a 0.6% forecast. Non-food sales declined 0.3%, while food sales increased 3.1%. BRC's Helen Dickinson described the season as “drab,” with slow sales growth offset by post-holiday discounts.
· Switzerland’s consumer sentiment improved to -31 in January from -34, beating expectations. Economic and financial outlooks strengthened, inflation fears eased, though unemployment concerns rose slightly, marking the best reading since early 2025.
· Australia’s Consumer Sentiment Index fell 1.7% to 92.9 in January, as one-year economic outlook dropped 6.5%. Household finances improved slightly, but unemployment concerns rose. Westpac’s Mathew Hassan cited growing caution and inflation fears.
Key Points
· Equities: Wall Street nudges to new highs, Europe adds small gains, while China-led Asia rallies as deflation fears fade.
· Volatility: VIX firmer at ~15, CPI risk lifts short-dated hedging, downside skew remains bid
· Digital assets: Bitcoin and ethereum steady, IBIT and ETHA track macro tone, CPI and rates in focus
· Currencies: USD firms again, JPY craters on rising anticipation of Japan snap election.
· Commodities: Precious metals pause, corn slides on big crop, crude rallies on Iran tariff threat
· Fixed income: Japan’s long yields blow out higher on rising anticipation of Japan snap election.