DeepSeek Disruption: Chinese Startup Shakes AI Sector, Raises Questions on U.S. Tech Dominance

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.4240-1.4450

Euro                 1.4980-1.5200

Sterling            1.7830-1.8050

WTI Oil (opening level) $74.11

The CAD is opening at 1.4360 ( 0.6964 )

I like to look at the 15 day trend projection for USD/CAD to see if there is anything that jumps out at me. The recent trend is in the 0.69 to 0.70 range and the chart doesn't see any breakout for the next 15 days. The market is still waiting for interest rate decisions in both Canada and the USA, along with possible trade tariffs and some movement on the price of oil.

If Trump gets lower interest rates from the FED - as he called for last week- then that should boost the value of the CAD. But this all comes back to my saying 'expect the unexpected' for the next few weeks, so I expect more of the same! 

The new moon -marking Chinese New Year- is this Thursday. So expect trading volumes to be lower since the country will be celebrating for a week or so, and exports stop moving as a result.

Headlines

·    Chinese artificial intelligence startup DeepSeek rocked global technology stocks Monday, with the Nasdaq leading the decline as it raises questions over America’s technological dominance. The Chinese AI startup's new model is cost-effective and runs on reduced-capability chips. The development raises questions about the high valuations of leading AI companies like Nvidia and the investment case for the entire AI supply chain.

·    Trump cancelled the assessment of any tariffs against Colombia after reaching a deal with the country on delivering deportees to the country by plane. This after Trump threatened 25% tariffs against imports from Columbia for its refusal to allow a plane with deportees to land.

·    An FT article rounding up FactSet estimates suggests that Wall Street banks expect that Tesla’s sales growth this year may only reach 16 percent versus 2024, below the 20-30 percent that Musk predicted last October. The low growth would be in part on US President Trump’s dismantling of EV buying incentives.

Key Points

·    Equities: US futures tumbling, led by tech on fears China’ DeepSeek may disrupt AI complex

·    Volatility: VIX steady; futures rise; SKEW signals tail-risk; Fed and earnings in focus

·    Digital Assets: Bitcoin drops below $100K; altcoins follow

·    Currencies: US dollar firms on weak risk sentiment, reversing some of Friday’s weakness

·    Commodities: Gold’s trade lower after failing to reach a fresh record high

·    Fixed Income: Treasuries trade higher ahead of heavy week of bond auctions