– EURUSD popped and dropped on German election results.
– Trump encourages Mexico to join his tariff fight with China.
– USD opens on a mixed note but within previous ranges.
USDCAD: open 1.4215 overnight range 1.4182-1.4228 close 1.4226, WTI 70.42, Gold 2938.25
The Canadian dollar traded with a negative bias following dire warnings from Bank of Canada Governor Tiff Macklem on Friday. The Governor warned that a protracted trade war would have severe consequences for the Canadian economy. They included a sharp decline in exports affecting one-quarter of Canada’s income and higher prices for consumer goods. Mr. Macklem expressed similar thoughts following the last monetary policy decision, so his comments are not new. But they are more relevant as the March 4 tariff date nears.
WTI oil prices trade lower in a 70.02-70.67 range on fears that the reopening of a Turkish-Iraq pipeline will increase supply in a market that already faces a glut due to higher OPEC production and weaker demand from China.
Asian equity indexes were little changed, and European bourses are close to flat. S&P 500 futures are up 0.52%, while the US 10-year Treasury yield is steady at 4.43%.
President Trump‘s team has suggested to Mexican authorities that a possible way to avoid US tariffs is if Mexico imposes tariffs on all Chinese imports. Those comments helped boost negative risk sentiment overnight.
EURUSD traded in a 1.0462-1.0528 range. Prices rallied on the German election results, then retreated after the German IFO survey data. The survey was mixed but indicated that the economy continued to stagnate.
GBPUSD drifted in a 1.2626-1.2691 band. Prices climbed on EURGBP selling in response to the German election results, but the move did not last. The UK economic calendar is light, but three Bank of England officials are speaking today.
USDJPY traded choppily in a 148.84-149.84 range but in a thinner-than-usual market due to a national holiday in Japan. Expectations that the Bank of Japan will raise rates sooner rather than later, combined with safe-haven demand for the yen, weighed on the currency.
AUDUSD see-sawed in a 0.6361-0.6393 range. Initial support came from the German election results, but concerns over expanding U.S. tariffs on China quickly weighed on sentiment, leading to a pullback.
There are no US or Canadian economic reports today.
