Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3660-1.3910
Euro 1.6000-1.6250
Sterling 1.8500-1.8750
WTI Oil (opening level) $58.60
The CAD/USD is opening at 1.3780 ( 0.7257 )
CAD is the weakest of G10 currencies, as markets factor in potential Venezuelan Oil supply and uncertainty around USMCA renegotiations
Markets are clearly weighing the risks of increased supply of Venezuelan Oil in the future, which would disadvantage Canadian heavy, high-sulphur crude, which had been trading at a premium during Venezuela’s supply glut. WTI widened slightly on Monday, confirming the commodities market is trading carefully on these geopolitical events.
CAD is in a more vulnerable spot. Short-term models suggests the USD/CAD should be trading above 1.380. As well, markets may be underestimating the risks of USMCA renegotiation uncertainty’s impact on the economy, and the risks that the Bank of Canada may have to cut again in 2026.
Headlines
· The US ISM Manufacturing PMI fell to 47.9 in December, the lowest since October 2024, indicating faster contraction in manufacturing. Production and inventories declined, while price pressures remained high. New orders, backlog, and exports improved, and employment contracted less sharply.
· UK mortgage approvals dropped to 64,500 in November 2025, the lowest in five months, due to tax changes and falling house prices. Remortgaging approvals rose to 36,600. The interest rate for new mortgages increased to 4.20%, and for existing mortgages to 3.90%.
· Australia's Services PMI fell to 51.1 in December from 52.8 in November, indicating slower growth. New orders slowed, employment rose, and export demand softened. Business confidence peaked since June, while input and selling price inflation increased.
· Fed's Kashkari noted the cooling job market and high inflation, warning of potential unemployment rate increases. He expects housing services inflation to decline and suggests rates are nearly neutral.
Key Points
· Equities: U.S. and Europe climb on energy, banks and defence, while Hong Kong steadies as China data cools sentiment.
· Volatility: VIX subdued, single-stock volatility rising, energy names in focus
· Digital Assets: Bitcoin steady, ethereum firmer, IBIT leads ETF gains, ETHA strong, altcoins bid, crypto equities rally, risk-on tone, macro-sensitive
· Fixed Income: US Treasuries quiet. 10-year Japanese Government Bond yield hits fresh multi-decade high.
· Currencies: Monday’s USD rally reverses, JPY also weak while AUD, Scandies surge.
· Commodities: Geopolitical tensions lift precious metals, oil rebounds with focus on US energy companies