fundamental overview
USD opened higher today and dominated throughout the Asian session as we once again got some tariff headlines which weighed on risk sentiment. In fact, late yesterday Trump announced he would impose 25% tariffs and sanctions on Colombia because it refused to take deported migrants.
Colombia soon retaliated by imposing a 25% tariff on US imports. Late in the Asian session, however, we got the news that the US would hold tariffs and sanctions in reserve as Colombia accepted returned illegal immigrants from the US. This saw the US dollar weaken again and a fall in Treasury yields due to the stock market selloff further weighed on the greenback.
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 had got inflation back under control.
The CAD has not responded much to economic data recently as the focus has been on Trump’s threats of tariffs and the negative economic impact they will have on Canada. Trump said he intends to impose 25% tariffs on imports from Canada by February 1scheduled tribeCAD significantly underperforms its peers with the USD/CAD rate stuck in the around 150 pips range.
USDCAD Technical Analysis – Daily Time Frame
USDCAD Daily
On the daily chart, we can see that USDCAD broke below the key trendline, but continues to hover around higher as the specter of 25% tariffs in Canada on February 1st.scheduled tribe
remains. There’s not much we can glean from this time frame so we need to zoom in to see some more details.
USDCAD Technical Analysis – 4 Hour Time Frame
USDCAD 4 hours
On the 4-hour chart, we can see that the pair continues to trade between 1.4300 support and 1.4470 resistance. Market participants will continue to play the range by buying at support and selling at resistance until we have a breakout on either side.
USDCAD Technical Analysis – 1 Hour Time Frame
USDCAD 1 hour
On the 1 hour chart, we can’t add much here as buyers will look for a bounce around support or a break above resistance, while sellers will look for rejection around resistance or a break below support. The red lines define the average daily range for today.
upcoming catalyst
Tomorrow we get 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 data. On Friday, we conclude the week with US PCE and the US Employment Cost Index.
