The USD is firming, oil prices are rising, equity markets are up, and US yields are easing following comments from US Treasury Secretary Bessent. The USD edged higher in early trading but remains within recent ranges as investors seem to be sidelined ahead of Friday's critical US Nonfarm Payrolls report. Global equity markets received a boost after US Treasury Secretary Bessent stated that the Trump administration is focusing on lowering Treasury yields. The STOXX 600 reached a record high, supported by strong earnings from Société Générale, AstraZeneca, and A.P. Moller-Maersk. In an interview with Fox Business, US Treasury Secretary Bessent remarked that regarding the Fed, "I will only discuss what they've done, not what I think they should do moving forward." Meanwhile, oil prices have risen, but persistent concerns about Trump’s policies continue to limit further gains. Bitcoin has strengthened to $99k, while both oil and silver are easing in early trading. Today’s focus will be on US initial Jobless Claims, ChallengerJob Cuts, the UK BoE interest rate decision, and CAD Ivey PMI to provide intraday direction for currency markets.
News Headlines. Trump team considers demanding WHO reforms, including an American in charge. Nearly 90% of Germans fear foreign election interference, finds survey. Xi calls for China & Thailand to beef up ties to fight global uncertainties. Israel orders army to prepare for 'voluntary departure' of Gazans after Trump unveils plan. Last month was the world's hottest January on record, EU scientists say. Ford beats earnings expectations but forecasts tougher year ahead. PM Trudeau will host a Canada-US Summit amid threat of Trump tariffs. Carney pledges defence spending, takes aim at Trump; Freeland unveils economic plan.
In currency markets. The USD is sidelined ahead of the key US jobs report Friday, while the pound eases in early trading ahead of the BoE interest rate decision, and the JPY gained with expectations of further BoJ rate hikes. CNY & Asian currencies on average weakened by 0.25% against the USD. Trading currencies are mixed, with CHF, NZD& NZD weakening 0.45%, NOK, SEK, MXN, AUD eased by 0.25%, and JPY firmed by 0.1% against the USD.
In commodity markets. Oil & Soybean prices strengthened by 0.75%. Natural Gas & Gold prices eased by 0.4%. Silver prices tumbled by 1.7%. Copper prices gained by 0.55%, and Wheat prices are up by 0.35%.
CAD volatility continues as the loonie weakens from Wednesday's two-week high of 1.4266 while the USD rebounds. However, the ongoing threat of US tariffs is expected to limit short-term CAD strengthening. Domestically, data released on Wednesday indicated that Canada's trade balance has shifted into surplus, whereas today's Ivey PMI for January is anticipated to ease to 53 from the previous 54.7. Investors are likely to remain on the sidelines and trade within current ranges ahead of Friday's crucial US and Canadian jobs reports.
EURCAD is steady as both currencies are sidelined ahead of Friday's critical jobs reports.
EUR dips below 1.0400 amid mixed EU data and a stronger USD. The euro faces selling pressure, ending a two-day rally as the USD gained strength and EU retail sales fell short of expectations. Domestically, German factory orders surged in December, boosting optimism that the sector's outlook may be improving. Key EU retail sales, year-over-year, met expectations, while month-over-month December retail sales decreased by 0.2% compared to flat growth in November. Intraday, we anticipate the euro will remain within its current trading range as investors await the important US NFP report onFriday.
GBPEUR eased in anticipation of the expected 25 bps interest rate cut by the BoE.
GBP weakens ahead of the Bank of England’s interest rate decision. The pound remains on the back foot in early trading and is set for its largest daily drop in about four weeks as investors await the Bank of England’s interest rate decision and subsequent comments from the BoE Governor. "While the Monetary Policy Committee may wish to ease more rapidly, persistent inflation doesn't allow them to do so yet and will likely also prevent any sort of dovish pivot at this stage," said Brown, senior research strategist at Pepperstone.
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