Canadian Dollar Falls on Leadership Crisis and Trade Worries

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

US Dollar        1.4240-1.4460

Euro                 1.4950-1.5180

Sterling            1.8030-1.8260

WTI Oil (opening level) $68.98

The CAD is opening at 1.4342 ( 0.6972 )

CAD is the weakling among G10 currencies as USDCAD zipped well above 1.4300 on concerns that Trump will follow through with the threatened 25% tariffs against Canada (10% for energy products) next week when the 30-day delay in the tariff imposition runs out.

The situation has progressed to this state because there is no sitting government in Canada. This has created a 'crisis' of mismanagement here in Canada. CAD is exposed more than any other currency because of the shut down. It is a travesty of leadership in Canada.

A tariff is inflationary- prices will go up on everything. But it is not a blockade, goods will continue to move across the border! So the crisis is that we don't have strong leadership that understand that they were elected to represent us- not shut down parliament. A minority government should never have been given permission by the Governor General to prorogue parliament.

Now we are stuck with a weakening currency in anticipation of the tariff.

Headlines

·    The US House of Representatives passed a budget bill which would slash spending on social safety-net programs, especially Medicaid and food stamps, which would enable up to USD 4.5 trillion in tax cuts over the next 10 years. The bill would also raise the US debt ceiling by USD 4 trillion, which would avoid compulsory spending cuts and the theoretical risk of a default, which are a risk as soon as this summer if no ceiling raise is agreed. Senate Republicans have said that they are seeking larger tax cuts and some are against the deep cuts to safety-net programs. No bill becomes law until a version is agreed by both the House and the Senate and the President then signs it into law. The vote in the House passed by a margin of 217 to 215, with only one Republican not voting in favour and all Democrats against.

·    Australia Jan. CPI out at 2.5% YoY vs. 2.6% expected and 2.5% in Dec., but the core, “trimmed mean” CPI rose to 2.8% YoY vs. 2.7% in Dec.

·    Ukraine agreed yesterday to sign a deal on jointly exploring natural resources with the US that is seen as critical for any US willingness to provide long-term security commitments to the embattled country. Ukraine managed better terms than the original deal, which would have required the rights to USD 500 billion in revenue.

·    US consumer confidence saw its biggest drop since August 2021 in February, amid concerns about the economic outlook and uncertainty over Trump administration policies. The Conference Board's index fell 7 points to 98.3 in February, its third consecutive decline, and below all Bloomberg survey estimates. 

Key Points

·    Equities: US stocks mixed; Tech under pressure; Europe flat; China, HK rally on AI

·    Volatility: VIX rises; Nvidia earnings key; VIX futures ease; SPX, NDX futures up

·    Digital Assets: BTC < $89K; ETH at Nov lows; $1B ETF outflows; Crypto stocks drop

·    Currencies: JPY edges lower after attempt at USDJPY breakdown. CAD weak on Trump tariff concerns

·    Fixed Income: US treasury yields plunge on weak Feb. Consumer Confidence

·    Commodities: Gold rebounds; Oil near 2-month lows; Trump targets copper tariffs