The US dollar is trading higher, while oil prices are declining. Equities are edging upward, and bond yields remain flat. The U.S. dollar is heading for a third consecutive weekly drop, as traders reassess the impact of Trump's second term, particularly his approach to tariffs. Despite the bold rhetoric around tariffs, many market participants have come to view it as largely bluster, with limited tangible impact on the economy. This has created uncertainty, causing the dollar to weaken. The market is awaiting key reports today, including the Flash PMI, existing home sales, and the final University of Michigan Consumer Sentiment, to gauge economic growth, inflation, and consumer confidence.
News Headlines. Trump has indicated that a new trade agreement with China is "possible." He noted that the U.S. had previously secured a "great trade deal with China" in 2020 and expressed optimism about reaching another agreement. The United States is opposing a statement in a Group of 7 draft marking the third anniversary of Russia's invasion of Ukraine, which calls Russia the aggressor. This comes after President Trump blamed Ukraine for starting the war, despite it beginning with Russia's attack. Israel has accused Hamas of violating a ceasefire agreement by returning the body of an individual who does not correspond to any known hostage. Hamas has announced plans to release six hostages tomorrow, though details remain limited
In currency markets. Japan's core inflation rate has risen to a 19-month high of 3.2% in January, exceeding market expectations. This unexpected increase has fueled speculation that the Bank of Japan (BOJ) may consider raising interest rates sooner than previously anticipated. Despite this news, the JPY has weakened 0.41% against the USD. RBA remains cautious about further rate cuts, stating future adjustments will be data-driven, focusing on employment and inflation trends. The AUD is down 0.14% against the USD, while the NZD fared slightly better, dropping just 0.01%. Among other Asian currencies, the MYR rose 0.28% against the greenback, while the CNY declined by 0.27%. In the emerging market currencies, the ZAR and MXN fell by 0.11% and 0.14%, respectively, against the USD.
In commodity markets. oil futures have dipped 1% but are still set for a 1.5% weekly gain, driven by concerns over supply disruptions in Russia and potential impacts from President Trump's proposed tariffs on China, the European Union, Canada, and Mexico. Natural gas prices have risen by 3.3%, while metal prices are mixed: gold is down 0.33%, silver is up 0.08%, and copper has fallen 0.55%. Agricultural commodities are all trending higher, with wheat up over 1%, soybeans rising 0.08%, and lumber increasing by 0.9%.
Current level USD Index 106.66 Up 0.28%
USD/CAD pair is currently navigating through a period of consolidation, influenced by trade negotiations and economic data releases. Canadian retail sales data and developments in U.S.-China trade relations are expected to influence the currency pair's movement.
Current level USD/CAD 1.4195 Up 0.15%
EUR/CAD remains range bound as the market awaits the release of Canada's retail sales figures later this morning.
Current level EUR/CAD 1.4855 Down 0.18%
EUR/USD German PMI data released today showed a modest improvement in the country's economic activity. The manufacturing sector continued to struggle, but the services sector saw growth, signaling some resilience in the broader economy.
Current level EUR/USD 1.0467 Down 0.33%
GBP/EUR the stronger-than-expected UK retail sales data provided support for the British pound, leading to its appreciation against the euro. The euro's performance remained stable ahead of the Eurozone PMI releases, which are anticipated to offer further insights into the region's economic health.
Current level GBP/EUR 1.2086 (0.8274) Up 0.19%
GBP/USD UK Retail Sales rose 1.7% in January, exceeding expectations and recovering from December's 0.6% decline, signaling stronger consumer spending. Meanwhile, recent US data shows a weakening dollar, impacted by soft jobless claims and hopes of a US-China trade deal.
Current level GBP/USD 1.2652 Down 0.14%
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