FOREX: Souring Sentiment Sends USDJPY Back Towards Cycle Lows
* USDJPY is trading sharply lower today, resulting in the pair erasing almost the entirety of yest...
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OPTIONS: Expiries for Mar12 NY cut 1000ET (Source DTCC)
- USD/JPY: Y146.85-00($516mln), Y148.00($1.3bln)
- USD/CAD: C$1.4380($574mln)
- USD/CNY: Cny7.2000($1.0bln), Cny7.2200($1.0bln), Cny7.2500($953mln)
CAD: /JPY Looks to Make Clean Break of Key Support
We wrote yesterday of the importance of support in CAD/JPY at the pullback August lows (tripped by BoJ intervention) at Y101.67 - the price has shown below this mark today as tariff talk again adds weight to the cross. Confirmed clearance via a close below here would be resolutely bearish for the cross, opening levels last seen in 2023. This leaves the next key support at Y100 psychologically, and Y99.93, the 76.4% retracement for the upleg posted off the 2023 low.
- These tariff headlines are adding extra weight and further underscore the market perception that the CAD is more exposed to tariff risk vs. MXN (CAD/MXN is 1% lower March-to-date).
- The clear downward near-term momentum in the cross follows the Rengo pay tally from last week - underlining pay demands at their highest level in over 30 years for the 2025 Shunto round.
- While the March BoJ decision sees only an outside of a rate hike - but the May 1st meeting could be more consequential, for which the decision could be contingent on the Tankan survey on April 1, reports from the Bank's branch managers' meeting on April 7, the updated Rengo tally in April, and CPI.
US: CANADA: Trump Says Canada Will Pay Big Financial Price
US President Donald Trump has issued a second warning to Canada, warning of a 'big' financial price for a move by Ontario governor Doug Ford to apply a 25% surcharge to electricity sent to three US states.
- Trump wrote on Truth Social: "Why would our Country allow another Country to supply us with electricity, even for a small area? Who made these decisions, and why? And can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat? They will pay a financial price for this so big that it will be read about in History Books for many years to come!"
- CNBC reports, citing a senior White House official that the paperwork adjusting tariffs on Canada has yet to be signed, raising the possibility that a negotiated resolution can be struck before the midnight deadline for metals tariffs.
- Bloomberg reports that Ford and Commerce Secretary Howard Lutnick will speak today, but Trump is not scheduled to speak with any Canadian officials.
- This evening at 17:00 ET 21:00 ET, Trump will address CEOs looking for clarity on the adminstration's tariff strategy at a Business Roundtable event.
- White House press secretary Karoline Leavitt is scheduled to brief reporters at 13:00 ET 17:00 GMT, although recent restrictive measures by the White House means Leavitt may not face robust questioning on today's tariff moves.
