Loonie Slips as Trump Confirms Tariffs, Markets Eye March 4 Deadline

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

US Dollar        1.4140-1.4360

Euro                 1.4850-1.5080

Sterling            1.7930-1.8160

WTI Oil (opening level) $70.31

The CAD is opening at 1.4265 ( 0.7010 )

The Canadian dollar edged lower as Trump claimed US tariffs against the country’s export to the US remain on track, with the March 4 deadline coming into view next week. The Mexican peso traded slightly softer as well, but seems less sensitive to the tariff issue as Mexico appears to be moving in compliance with the Trump administration as it is said to be studying ways impose tariffs on China to avoid the 25% US tariffs.

Headlines

·    The Trump administration is said to be seeking a tightening of restrictions on exports of high-end semiconductor chips and chip manufacturing equipment to China from US allies such as Japan and Netherlands, with Tokyo Electron and ASML Holding NV two companies in focus as their engineers are employed to maintain semiconductor manufacturing gear on site. A further restriction on the export of additional Nvidia chips is also a part of the discussions according to unnamed sources cited by Bloomberg.

·    The US withdrew a condemnation of Russia’s 2022 invasion of Ukraine at the United Nations and among G-7 countries. The US and Russia then both approved a US resolution at the UN calling for a swift end to the conflict without assessing blame.

·    Ukraine and the US said to be close to a deal on US access to Ukraine’s natural resources in exchange for US commitment to a “free, sovereign and secure” Ukraine and investment in the country and “lasting peace”.

·    Germany is discussing a EUR 200 billion defense fund as chancellor-in-waiting Friedrich Merz is already in talks with the left-center Social Democrats to approve an extraordinary spending package, before any government has even been formed by the two partie.

Key Points

·    Equities: Nvidia earnings, PCE inflation in focus; Europe weak on German election uncertainty; China sinks as Trump tariffs return

·    Volatility: VIX climbs as hedging demand rises ahead of key catalysts

·    Digital Assets: Crypto sentiment deteriorates as Trump’s tariffs rattle markets

·    Currencies: Canadian dollar weaker as Trump’s tariffs remain on course. Euro sideways post-German election.

·    Fixed Income: US treasury yields dip to new lows for the year on weak risk sentiment

·    Commodities: Gold retreats from record highs, oil rises on Iran sanctions