– US markets closed for MLK day
– Global markets on hold for Trump inauguration.
– USD is steady but firm after quiet overnight session.
USDCAD: open 1.4470, overnight range 1.4443-1.4486, close 1.4477, WTI $77.00, Gold, $2708.48
The day of reckoning has arrived for the Canadian dollar. Donald Trump’s presidency officially begins, and Canada is waiting to see if one of his first actions as president will be to announce a 25% tariff on all imports from Canada. Any clarify on tariffs will have a significant impact on the loonie.
Canada appears ill-equipped to counter such an aggressive move. The provincial premiers have proposed potential retaliatory measures, but Alberta’s Premier Danielle Smith has ruled out any strategy involving export taxes on the province’s crude oil.
Canadian dollar traders have already pushed the currency pair to levels last seen in March 2020. By the day’s end, further losses seem inevitable.
Canada’s inability to address external challenges, due to internal political wrangling, leaves the country vulnerable to Trump’s tariff threats. While provincial leaders have outlined counter-tariff options, Prime Minister Trudeau, in his lame-duck role, has stated he will respond to U.S. actions as they arise.
Meanwhile, the Bank of Canada’s Business Outlook Survey is set for release today but will likely be overshadowed by U.S.-focused developments.
Oil prices are caught between competing forces—anticipated demand increases due to a polar vortex engulfing much of North America and improved market sentiment following hostage releases by Hamas, reciprocal actions by Israel, and reports of a more energy-friendly U.S. policy.
Global markets are holding their breath, focused on Washington, where Donald Trump is returning to the office he vacated four years ago. This time, the gloves are off. He intends to govern on his terms, likely upsetting the current global order.
Global markets, including FX, remain stagnant and stuck within Friday’s range.
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