- Trump’s Fed nomination roiled markets Friday
- Gold & Silver attempting to rebound
- US dollar claws back some losses in choppy overnight session
USDCAD open: 1.3633, overnight range 1.3607-1.3675, close 1.3618, WTI 61.97, Gold 4709.85
The Canadian dollar continues to show surprising resilience despite renewed US dollar demand following Trump’s nomination of Kevin Warsh to replace Jerome Powell. The sharp selloff in gold and silver has also helped firm the downside then subsequent bounces are helping to keep the support the Canadian dollar.
Friday’s domestic data offered little encouragement. Statistics Canada estimates December GDP at just 0.1%, underscoring a sluggish growth profile. Ongoing uncertainty surrounding Canada-US trade relations remains a persistent headwind and is likely to continue weighing on business confidence and investment decisions.
WTI crude traded in a 61.43–63.93 range, retreating after reports that Iran and the US are scheduled to meet later this week. Energy prices were also pressured by the steep decline in precious metals, while OPEC’s decision to leave production quotas unchanged was widely anticipated and drew little market reaction.
US ISM Manufacturing PMI is expected at 48.3, compared to 47.9 in December.
The lustre has faded for precious metals after a brutal selloff gave way to choppy, two-way trade overnight. Gold collapsed after peaking at 5593.32 on Thursday and settling at 4865.35 on Friday, then slid further in Asia to 4402.38 before stabilising in Europe and rebounding toward 4670.56 by early New York trade.
Silver was hit even harder, plunging from Thursday’s 121.31 high to 71.40 before attracting dip buyers and recovering toward 80.68 in New York. The speed and violence of the move raise the usual question of correction versus trend change, but with Trump still in the Oval Office, history argues for the former.
The turmoil in precious metals, layered on top of uncertainty surrounding Trump’s Fed Chair nominee Kevin Warsh and the familiar hawk-versus-dove debate, has unsettled equities and offered the US dollar a measure of support.
Asian equity markets closed sharply lower, led by a 2.23% drop in the Hang Seng, while the ASX 200 fell 1.02% and Japan’s Topix lost 0.85%.
By 8:00 am, European bourses were higher led by the DAX which is up 0.76%. The French CAC-40 has gained 0.47%, and the FTSE 100 has risen by 0.55%.%. S&P 500 futures are down 0.43%, the US Dollar Index sat at 97.28 and the 10-year Treasury yield is4.235%.
EURUSD traded in a 1.1833–1.1875 range and is at the low. Eurozone manufacturing data sent mixed signals, with weak orders and continued job losses offset by improving business confidence. Traders largely brushed aside the data and shifted focus to Thursday’s ECB decision and whether policymakers push back against recent euro strength.
GBPUSD gave up earlier gains and near the bottom of its 1.3661–1.3716 range. Support from stronger-than-expected UK PMI data showed manufacturing activity and business optimism at 17-month highs has faded.
USDJPY traded in a 154.55–155.51 range as the rally extended on comments attributed to Prime Minister Sanae Takaichi that appeared to favour a weaker yen.
AUDUSD traded in a 0.6909–0.6971 range, remaining under pressure after last week’s sharp US dollar rally tied to Kevin Warsh’s Fed Chair nomination. Softer commodity prices and mixed Chinese PMI readings added to the drag. Markets continue to expect the RBA to cut rates by 25 bps to 3.85%, a view reinforced by the TD Inflation Gauge showing CPI rising to 3.6% y/y from 3.5% in December.
