USD Weakens on Treasury Comments; JPY Swings on BoJ Intervention

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

US Dollar        1.4080-1.4290

Euro                 1.4740-1.4970

Sterling            1.7820-1.8060

WTI Oil (opening level) $71.86

he US dollar traded on the weak side yesterday on Secretary of Treasury comments on issuing longer term debt and Fed QT policy as US long yields fell. EURUSD teased above 1.0500 and USDJPY traded as low as 149.29 overnight before rallying sharply on BoJ comments on intervening in the Japanese Government bond market overnight (see above in Fixed Income). 

Headlines

·    The British Pound rose after UK retail sales including auto fuels exceeded all estimates after rising 1.7% m/m in January, the biggest increase since May.

·    Markets turned risk off after Walmart’s outlook disappointed. Risk sentiment was further dampened by weaker-than-expected data and geopolitical uncertainty due to tensions between the US and Ukraine. White House National Security Advisor Waltz criticised Ukraine's negative remarks about the US, urging them to reconsider and consider making a deal with the US on access to minerals in Ukraine and stating that differences could be resolved through shuttle diplomacy for peace talks.

·    Japan's annual inflation rate rose to 4.0% in January 2025 from 3.6%, the highest since January 2023. The monthly CPI increased by 0.5%, following December's 0.6% rise. The core CPI, excluding fresh food but including fuel, rose 3.2% year-on-year, surpassing expectations of 3.1% and marking the highest since June 2023.

·    US Philly Fed Business Index for Feb was out at 18.1 vs. Exp. 14.3 expected and the US Leading Index Change MM for January out at -0.3% vs. Exp. -0.1% (Prev. -0.1%, Rev. 0.1%)