Canadian Dollar Gains as USD Softens: Sales Data or Global Moves?

Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.4230-1.4440
Euro 1.4920-1.5130
Sterling 1.7700-1.7920
WTI Oil (opening level) $75.06
The CAD is opening at 1.4330 ( 0.6978 )
The Canadian $ opens stronger than it closed yesterday. Why?
Yesterday we saw a nice sales report that showed a gain of 1.6%m/m, which was the highest monthly pace since January 2023.
There are effectively 3 reasons for the gain. 1- consumers reaction to the lower interest rates from BoC. 2- a federal sales tax holiday on items (which started in mid Dec and run until mid Feb). 3- it's Christmas time and everyone is spending money!
The November numbers were no where as impressive- basically flat- so the growth from one month to the next could be a sign that all of the stimulation helped.
Does this really explain the bump in the CAD this morning?
I don't think so.
It was probably Trump speaking to the World Economic Forum that he needs lower oil prices and lower interest rates to make his economy work. And that would mean help from OPEC and cuts from the FED in the USA on interest rates. So the USD fell against all majors marginally and the USD index reflects this, coming down to the mid 107's rather than seeing a 108 to 109 during this last week.
Next week the BoC is likely to lower interest rates in Canada by another 25 bps. If that rate cut is not matched by the FED, then the differential will widen even further and that will likely weaken CAD.
Headlines
· President Trump in an overnight interview said he would prefer not to impose tariffs on China, a sign that he is willing to negotiate with Beijing, and combined with an earlier call for the Fed to lower interest rates and OPEC to lower oil prices, the dollar has seen broad weakness, with the dollar index hitting a one-month low.
· The Bank of Japan raised its interest rate, as expected, by 25 bps to 0.5% after signalling that is sees a faster pace of inflation in the coming years compared with its previous forecast. During the press conference, BoJ Governor Ueda said rates will rise if economic outlook holds.
Key Points
· Equities: US record highs, healthcare/industrials lead, DAX at peaks
· Volatility: VIX steady at 15.02, SKEW at 179, muted downside hedging
· Digital Assets: Bitcoin $105,012 (+1.1%), Trump’s executive order, altcoins rise
· Currencies: JPY rallies on hawkish BoJ. USD softer on dovish Trump tariff comments on China.
· Commodities: Crude heading for weekly loss; gold near October record as dollar softens
· Fixed Income: US yields ease back lower overnight, while Japanese short yields post new cycle highs on hawkish BoJ
Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.2525-1.2625
Euro 1.3450-1.3550
Sterling 1.5700-1.5800
Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.2100-1.2200
Euro 1.4700-1.4800
Sterling 1.7050-1.7150
Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3700-1.3800
Euro 1.4700-1.4800
Sterling 1.7400-1.7500