The USD holds steady, oil prices strengthen, and equity markets and US yields are mixed as trade war concerns increase caution. The USD holds steady ahead of the Fed testimony, while the INR rallies the most in nearly two years on heavy central bank intervention. Gold tests record highs, while global equity markets are subdued as investors remain sidelined for further developments in US trade policy, caution ahead of the Fed Chair’s testimony, and the critical US inflation report on Wednesday. On Monday, US PresidentTrump raised tariffs on steel and aluminum imports to 25% and promised to announce global reciprocal tariffs within days. Elsewhere, oil prices extend gains on supply worries, while Bitcoin retested $98k, and gold tested a high of2,968.50. Today's focus will be on the first day of Fed Chair Powell’s testimony, BoE Governor Bailey’s and ECB’s Schnabel speeches to help drive intraday direction to currency markets.
News Headlines. EU readies response as Trump hikes steel and aluminium tariffs. Gold at record, stocks mixed as investors weigh Trump's latest tariff threat. Musk-led group makes $97.4 billion bid for control of OpenAI. US VP Vance warns Europeans that heavy regulation could kill AI. Trump says Hamas should free all hostages by midday Saturday or 'let hell break out.' BP pledges reset as annual profit dips below $9 billlion. Scholz, challenger Merz vow to shun extreme right as German election nears. Canadian industry braces for Trump's promised tariffs on steel, aluminum. TD Bank to exit US$ 15.4B stake of Charles Schwab as new CEO begins overhaul.
In currency markets. G10 currencies are little changed before the Fed testimony and the US CPI report on Wednesday. CNY & Asian currencies on average are flat against the USD. Trading currencies are mostly steady, with JPY weaker 0.3%, ZAR eased 0.2%, AUD, MXN, NOK, SEK & CHF flat, and NZD up 0.15% against USD.
In commodity markets. Oil prices strengthened by 1.1%. Natural Gas prices rallied by 1.5%. Gold is flat. Silver prices weakened by 1%. Copper prices tumbled by 2.45%. Wheat prices firmed by 0.6%, and Soybean prices are up by 0.2%.
CAD continues on the back foot against the USD after the US announced 25% steel and aluminum tariffs, while recent upbeat CAD jobs data and strengthening oil prices helped to provide some support to the loonie. We expect currency markets to remain steady ahead of two days of Fed testimony and Wednesday's critical US inflation report. Intraday, CAD building permits are expected to jump to 2.3% in December, up from -5.9% in November.
EURCAD continues to edge higher as CAD continues suffer under US tariff threats, we expect markets to steady ahead of ECB Schnabel speech and Fed Chair Powell's testimony.
EUR steadies near 1.0300 following Monday's weakness. Euro steadies as investors step to the sidelines ahead of two days of US Fed testimony and Wednesday's critical US inflation report. The EU commission is pledging countermeasures against 'unlawful' US tariffs and is preparing a 'firm and proportionate' response. Investors will be monitoring Fed Chair Powells testimony, with investors expecting the Fed to take a more hawkish stance with the expected impact on inflation when the US tariffs hit in March.
GBPEUR slips in early trading as risk sentiment wanes and the BoE maintains its dovish stance.
GBP steadies ahead of the Fed testimony and the BoE Governor's speech. Investors will be focused on BoE Bailey's comments after policymaker Mann commented today that her unexpected vote for a half percentage point rate cut last week did not mean she wanted a series of rate cuts or that she would vote the same way again in March. Investors are sidelined ahead the US inflation report on Wednesday and the UK GDP on Thursday, which could impact expectations for the BoE's rate path. "We expect disappointing monthly GDP data to continue in December, with service output flatlining and manufacturing and construction activity both declining," said Raja senior economist at Deutsche Bank. Intraday, BoE Bailey's comments will be a primary drive for the pound.
For clients based in the European Economic Area, payment services for Payments International Inc. are provided by CurrencyCloud B.V..Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam.CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (RelationNumber: R142701).
Payment services in the United States are provided by Visa Global Services Inc. (VGSI), a licensed money transmitter (NMLS ID 181032) in the states listed here. VGSI is licensed as a money transmitter by the New York Department of Financial Services. Mailing address: 900 Metro Center Blvd, Mailstop 1Z, Foster City, CA 94404. VGSI is also a registered Money Services Business (“MSB”) with FinCEN and a registered Foreign MSB with FINTRAC. For live customer support contact VGSI at (888) 733-0041.
For clients based in the United Kingdom and rest of the world, payment services for Payments International Inc. are provided by The Currency Cloud Limited. .Registered in England and Wales No. 06323311. Registered Office: StewardshipBuilding 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic MoneyRegulations 2011 for the issuing of electronic money (FRN: 900199)
