USD / CAD - Canadian dollar awaiting inflation news
- Canada CPI expected to be unchanged in March.
- Trump hinting at a pause in auto tariffs.
- US still on the defensive.
USDCAD: open 1.3857, overnight range 1.3850-1.3909, close 1.3877, WTI 61.04, Gold 3221.94
The Canadian dollar is trading sideways but with a bit of an updraft ahead of this mornings Canadian March inflation report.
Canada’s inflation report will be center stage at 8:30 am. Inflation is expected to rise 0.7% m/m compared to 1.1% in February and be unchanged at 2.6% y/y. Economists are divided on what the data will mean for tomorrows BoC rate decision. A higher-than-expected result may tip the scales to a hold, from a 25 bp cut.
Global risk appetite improved after Trump suggested he might provide support for car manufacturers adjusting to supply chain changes. He noted they were shifting to components from Canada, Mexico, and elsewhere, and said they needed a bit more time before producing them domestically. That remark acted as a starting gun for equity bulls. However, the mood was tempered when he floated the idea of tariffs on pharmaceuticals and semiconductors, causing some of the early gains to fade, though Wall Street still ended in the green.
Asian stocks followed the upbeat tone, with Japan’s Topix index rising 1.00%, the Hang Seng edging up 0.23%, and Australia’s ASX 200 climbing 0.17%. European markets are in rally mode too, with Germany’s DAX up 1.52% and the UK’s FTSE advancing 0.97%. S&P 500 futures are taking a more measured approach, inching up just 0.11%.
EURUSD traded in a 1.1316-1.1379 range and remains well-bid as traders digest the evolving tariff landscape. The US trade measures are seen as increasing recession risks, which in turn support the euro. A steep drop in Germany’s ZEW Economic Sentiment Index to -14 was brushed aside, as the decline was widely anticipated and partly based on pre-tariff reversal data. Technicals remain positive while prices hold above the 1.1300 level.
GBPUSD rallied in a 1.3165-1.3247 range and extended its rally after breaching resistance at 1.3200. A solid UK jobs report provided some momentum, but the real driver came from US Vice President JD Vance’s remarks, suggesting a strong chance of a UK-US trade pact due to Trump’s personal ties and business interests in Britain. Traders are now eyeing tomorrow’s UK Retail Sales data.
USDJPY see-sawed in a 142.69–143.59 band, largely tracking risk sentiment and Treasury yields. The pair is supported by hopes of an auto tariff delay and softer US 10-year yields. Japanese trade delegates are currently in Washington, seeking progress on a bilateral agreement.
AUDUSD ranged between 0.6316 and 0.6378 and pushed higher as optimism about a pause in auto tariffs lifted sentiment. The RBA meeting minutes were largely uneventful but left the door open for a possible rate cut in May, which helped cap gains.
Canada Manufacturing Sales and housing starts are also on tap, The US has import and export price index and the NY Empire State Manufacturing index.
