- Trump said he would name his Fed Chair nominee today
- Canada GDP expected to rise 0.1% in November
- US dollar attempts a rebound
USDCAD open: 1.3535, overnight range 1.3482-1.3554, close 1.3491, WTI 64.64, Gold 5113.52
The Canadian dollar traded choppily overnight, but it has retreated from its session low in NY trading this morning. Canada’s November GDP data is expected to show the economy grew by 0.1% in November after shrinking by 0.3% in October. The data is too stale to matter, as it follows the BoC monetary policy statement and MPR.
Trump threatened tariffs on imports of Canadian aircraft in another Truth Social. Meanwhile, his demand to have American companies relocate production to the US has resulted in GM laying off 1,000 workers, effective today.
Former Fed Governor Kevin Warsh is reportedly Trump’s nominee for Fed Chair. The news prompted traders to lock in profits, and the greenback rose. There is a real risk that Warsh will be another Trump lackey; he has flipped his views to match Trump’s by embracing tariffs after a long history as a free-trade advocate and pushing for faster rate cuts last year.
Asian equity markets closed lower. Australia’s ASX 200 fell 0.65%, and Hong Kong’s Hang Seng lost 2.0%. Japan’s Topix was the outlier, rising by 0.59% due to the weaker yen.
As of 7:30 am, European bourses are higher, led by a 0.97% rise in the German Dax. The French CAC-40 is up 0.79%, and the UK FTSE 100 has risen 0.54%. S&P 500 futures have lost 0.33%, the US Dollar Index is at 96.41, the 10-year Treasury yield is 4.251%, and gold (XAUUSD) is 5,110.09 after plunging to 4,941.79 from 5,450.67.
EURUSD traded in a 1.1895–1.1975 range after reports that Trump will announce his pick for Fed Chair. Eurozone GDP rose 0.3% q/q, unchanged from the prior quarter but a tick better than expected, while German GDP increased 0.3% q/q after a flat prior reading. Traders are looking ahead to next week’s ECB meeting on February 5.
GBPUSD traded in a 1.3726–1.3815 range and is sitting at 1.3762 in early NY. Trump warned that it was “very dangerous” for the UK to do business with China, prompting UK business minister Bryant to respond that it would be “bonkers, frankly, for the UK to ignore the presence of China on the world stage.”
USDJPY traded higher in a 152.87–154.39 range, supported by softer inflation data, with Tokyo CPI (ex-food and energy) rising 2.0% versus a 2.2% forecast and December’s 2.3%. The results reduce the urgency for the BoJ to raise rates.
AUDUSD seesawed in a 0.6968–0.7056 range, giving back part of this week’s gains before bouncing to 0.7010 in NY. The pair tracked broad US dollar sentiment, although Australia’s PPI data provided some support. Today’s US data include Producer Prices (PPI) and Chicago PMI.
