Trump’s Ukraine Plan, Strong Jobs Report, and Market Moves in Focus

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

US Dollar        1.4240-1.4450

Euro                 1.4770-1.5000

Sterling            1.7760-1.7990

WTI Oil (opening level) $71.36

The CAD is opening at 1.4349 ( 0.6969 ) 

Headlines

·    Trump administration is expected to present a plan to end the Russia-Ukraine war at the Munich Security Conference next week according to sources cited by Bloomberg.

·    In the US, the ADP payrolls report revealed that private employers added 183,000 jobs in January, exceeding the expected 150,000 and surpassing December's 176,000. Job growth was robust in leisure and hospitality, but manufacturing showed weakness.

·    Treasury Secretary Scott Bessent says the Trump administration is focused on bringing down 10-year yields through lowering inflation and the fiscal deficit, rather than on the Fed’s policy rate. He aims to do this via expanding the energy supply and through the efforts of Elon Musk’s DOGE group.

·    The US trade deficit widened to $98.4 billion in December, up from November's revised $78.9 billion and exceeding forecasts of $96.6 billion. This marks the largest deficit since March 2022, driven by a goods deficit increase to $123 billion and a reduced services surplus of $24.5 billion, as companies rushed to secure goods before new tariffs.

·    The US ISM Services survey fell to 52.8 from December's revised 54, below the 54.3 forecast, indicating slower services sector growth. Business activity and new orders saw smaller increases, while inventories contracted for the third month. However, employment and new export orders rose faster, and price pressures eased.

Key Points

·    Equities: AI stocks recover, Nvidia +5.2%, Alphabet -7.3%, AMD and Uber fall on weak guidance

·    Volatility: VIX drops to 15.77 (-8.37%), normalizing; AMD, Uber, Amazon see active options trading

·    Digital Assets: Bitcoin +1.59% to $98K, MicroStrategy -3.3% despite BTC expansion

·    Currencies: JPY firms again overnight on hawkish BoJ rhetoric.

·    Commodities: Gold retreats after new record high yesterday. Silver trades near resistance.

·    Fixed Income: US long yields plunge in bull flattening move. US 10-year benchmark below key 4.50%

·    Macro events: Bank of England Rate Announcement, US Weekly Jobless Claims