Fundamental Overview
The USD opened higher today and continued to dominate throughout the Asian session as we got once again some tariffs headlines that weighed on the risk sentiment. In fact, late yesterday Trump announced that he will impose 25% tariffs and sanctions on Colombia because they refused to take the deported migrants.
Colombia retaliated soon after by imposing 25% tariffs on US imports. Late in the Asian session though, we got the news that the US will hold the tariffs and sanctions in reserve as Colombia accepted the illegal migrants returned from the US. That saw the US Dollar getting weaker again and the fall in Treasury yields caused by the stock market selloff weighed on the greenback further.
On the CAD side, the recent Canadian Employment report was much stronger than expected, while the CPI report came mostly in line with forecasts showing once again that the central bank got inflation back under control.
The CAD hasn’t responded much to economic data recently as the focus switched to Trump’s tariffs threats and the negative economic impact they could have on Canada. Trump said that he intends to impose 25% tariffs on imports from Canada as soon as February 1st. The CAD continues to underperform significantly its peers with the USD/CAD rate remaining stuck in a roughly 150 pips range.
USDCAD Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can see that USDCAD broke below the major trendline but continues to range around the highs as the spectre of 25% tariffs getting imposed on Canada on February 1st remains. There’s not much else we can glean from this timeframe so we need to zoom in to see some more details.
USDCAD Technical Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can see that the pair continues to range between the 1.4300 support and the 1.4470 resistance. The market participants will keep on playing the range by buying at support and selling at resistance until we get a breakout on either side.
USDCAD Technical Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, there’s not much we can add here as the buyers will look for a bounce around the support or a break above the resistance, while the sellers will look for a rejection around the resistance or a break below the support. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the US Consumer Confidence data. On Wednesday, we have the BoC and FOMC Policy Decisions. On Thursday, we get the US Q4 GDP report and the latest US Jobless Claims figures. On Friday, we conclude the week with the US PCE and the US Employment Cost Index.