– Canadian dollar awaiting US inflation data.
– Fed Chair Powell testifies again-this time to the House at 10:00 am.
– USD opens on a mixed not with the Japanese yen underperforming.
USDCAD: open 1.4308, overnight range 1.4280-1.4316, close 1.4285, $72.29, Gold, $2883.23
The Canadian dollar is drifting higher ahead of today’s US inflation report, but gains are likely to be limited due the lingering threat of a Canada/US trade war. The Canadian dollar gains may be due to speculation (hopes) that since the scheduled start to the steel and aluminum tariffs isn’t until March 12, there is a chance that Canada could be exempted.
US January inflation data is due and expected to show CPI holding steady at 2.9% y/y while easing to 0.3% m/m (prev. 0.4%). Fed Chair Powell likely anticipated this, which is why he told Congress the Fed is in “wait-and-see” mode. He reiterated that growth remains solid and the labour market stable, but tariffs didn’t make his talking points. He speaks again at 10:00 AM before the House Financial Services Committee.
Global equities are slightly firmer ahead of CPI, shrugging off JPMorgan’s warning that a stronger print could take 2% off the S&P 500. The Hang Seng rose 2.64% as local traders returned from the holiday, still optimistic about DeepSeek. Australia’s ASX 200 gained 0.60%.
Germany’s DAX is up 0.36%, leading European markets, while S&P 500 futures are down 0.11%.
EURUSD traded in a 1.0354-1.0380 range overnight, edging higher as the US dollar softened across major currencies. Powell didn’t introduce any new insights, and with no major Eurozone data, traders are focused on upcoming US inflation figures. Attention is also on Germany’s February 23 election, where CDU/CSU is expected to take the lead under Friedrich Merz.
GBPUSD drifted in a 1.2435-1.2466 range as it consolidates the recent gains after a BoE policymaker signaled limited room for rate cuts. The National Institute of Economic and Social Research (NIESR) noted that rising wages, government spending, and a weaker pound could curb the BoE’s ability to ease, forecasting just one rate cut in 2025.
USDJPY traded within 152.39-153.89, rallying during the Asian session and maintaining gains into NY. Powell’s remarks and new US steel and aluminum tariffs supported the move. BoJ Governor Ueda reiterated that policy adjustments will be dictated by economic conditions, highlighting concerns over rising food costs. The US 10-year yield was unchanged.
AUDUSD saw a 0.6272-0.6310 range, slipping after an early rally as markets braced for US CPI. Prime Minister Albanese suggested Australia might secure an exemption from Trump’s steel tariffs, but Trump later dismissed the idea.
The Canadian economic calendar is empty.
