Canadian Dollar Higher Today

STOCK INDEX FUTURES

Stock index futures are mixed to higher on Tuesday as traders continue to follow developments in the trade war, while digesting corporate earnings results.

On Monday, President Donald Trump agreed to “immediately pause” tariffs on Mexico and Canada for a month following successful negotiations with their respective leaders.

The Logistics Manager’s Index in the U.S. advanced to 62 in January 2025 from 57.3 in December 2024, indicating the fastest expansion in the logistics sector since June 2022.

The 9:00 central time December factory orders report is expected to show a 0.6% decline, and the 9:00 December Job Openings and Labor Turnover Survey (JOLTS) is anticipated to be 8.000 million.

The U.S. economy is likely to hold up better than economies elsewhere in the world.

CURRENCY FUTURES

The U.S. dollar index is lower as some flight to quality longs are liquidated.

In the longer term view, interest rate differentials are likely to underpin the greenback.

The Bank of England is widely expected to lower its Bank Rate by 25 basis points to 4.5% at its policy meeting on Thursday.

Canadian manufacturing activity increased at a slower pace in January. The S&P Global Canada Manufacturing Purchasing Managers’ Index declined to 51.6 in January from 52.2 in December.

The Canadian dollar is higher today after yesterday declining past 1.47 per U.S. dollar, which was its weakest level since April 2003.

INTEREST RATE MARKET FUTURES

Futures are steady at the front of the yield curve and are lower at the long end of the yield curve.

Some flight to quality longs are being liquidated today.

The yield on the 10-year U.S. Treasury note stabilized around 4.56% on Tuesday, recovering from multi-week lows hit yesterday as the postponement of planned U.S. tariffs on key trading partners reduced safe-haven demand for U.S. Treasuries.

A Federal Reserve survey on Monday showed U.S. banks say demand for business loans strengthened in the fourth quarter, with the net share of banks reporting an increase turning positive for the first time in two years.

The net share of banks reporting stronger demand for commercial and industrial loans from large and medium-sized businesses increased to 9.4% in the fourth quarter of 2024, and from small firms to 3.4%.

Federal Reserve speakers today are Mary Daly at 1:00 and Philip Jefferson at 6:30 PM.

Financial futures market are predicting the FOMC will reduce its fed fund rate by 25 basis points at its June 18 policy meeting.

 

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