Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3670-1.3920
Euro 1.6030-1.6280
Sterling 1.8310-1.8560
WTI Oil (opening level) $56.32
The CAD/USD is opening at 1.3793 ( 0.7250 )
USD/CAD trades slightly below 1.38. The pair holds beneath a descending 20-day Exponential Moving Average (EMA), keeping the short-term bias tilted lower as bounces remain contained by the average. The EMA’s steady downturn underscores persistent supply on upticks. The 14-day Relative Strength Index (RSI) sits at 35.09, near oversold after a modest bounce from last week’s extremes, while momentum remains fragile.
A sustained recovery would require a daily close above the 20-day EMA to ease downside pressure that could increase the odds of an upside move towards the round-level figure of 1.3900. Until then, the downbeat setup persists and could strengthen if the spot breaks below the August 7 low of 1.3720.
Headlines
· The Bank of Japan- as expected- raised its benchmark interest rate to 0.75%, the highest in 30 years, and said more increases are in the pipeline if conditions allow, citing a rising likelihood its economic outlook being realised. Japanese Government Yields rose sharply on the decision, with the 10-year JGB benchmark pulling several basis points higher and clearing 2.02%, the highest level since 1999.
· US inflation was 2.7% in December 2025, the lowest since July and below forecasts. Economists however agreed that the data was affected by the record-long government shutdown, which limited the Bureau of Labor Statistics' ability to collect prices and resulted in some categories showing unusually low inflation.
· Japan's annual inflation rate decreased to 2.9% in November 2025 from October's 3.0%. Core inflation remained at 3.0%, matching estimates. Monthly CPI rose 0.4%, consistent with October and the highest in eight months.
· ECB kept rates unchanged for the fourth meeting. President Lagarde stated no rate changes were discussed, focusing on a flexible approach amid uncertainty. Growth is forecast at 1.4% for 2025 and 2027, with inflation at 2.1% in 2025 and slightly decreasing thereafter, adjusting upward for 2026 due to services.
· The Bank of England cut the Bank Rate by 25 basis points to 3.75%, responding to easing inflation and economic strain. The vote was close, with future cuts depending on inflation trends. UK inflation dropped to 3.2% in November, below forecasts, amid GDP contraction and cooling wage growth.
· The US Fed's Goolsbee sees favorable inflation data but is wary of rapid rate cuts, seeking more sustained cooling of inflation. He notes the job market's steady cooling and suggests rates can drop significantly if inflation approaches 2%.
Key Points
· Equities: U.S. and Europe rise on softer inflation and central bank steadiness, while Hong Kong edges higher on tentative China data
· Volatility: VIX steady, SKEW high, PCE + triple witching risk
· Digital assets: BTC firm, ETH weak on flows, ETF outflows in ETHA
· Fixed Income: 10-year Japanese Government Bonds jump to multi-decade highs after Bank of Japan hike.
· Currencies: JPY weakens after hawkish hike from Bank of Japan, Sterling firms after less dovish than feared BoE guidance
· Commodities: Metals and energy divergence continue; Coffee and sugar slump on ample supply