Trading in the FX markets has turned notably listless, with Dollar continuing to drift lower but without broad-based follow-through. Political pressure, however, returned swiftly. US President Donald Trump again lashed out at Fed Chair Jerome Powell, criticizing the decision to keep rates unchanged and reviving his long-running argument that policy is far too tight. He said Powell “again refused to cut interest rates,” arguing there was “absolutely no reason” to keep rates at current levels. He went further, calling for substantial and immediate easing, insisting the Fed is acting too slowly.
The President also tied rate policy directly to trade strategy, claiming tariffs have made the US “strong and powerful again” and arguing that, as a result, the US should be paying lower interest rates than any other country. Markets largely shrugged off the remarks, seeing them as reinforcing political pressure rather than signaling imminent policy change.
Elsewhere, Oil prices surged, with WTI pushing back above the 65 mark to the highest level since late September. The rally was driven by rising concern over a possible US military strike on Iran. Markets are increasingly focused on the risk of retaliation, particularly the prospect that Iran could disrupt traffic through the Strait of Hormuz, a chokepoint for roughly 20 million barrels per day of global oil supply.
In FX performance terms for the week so far, Dollar remains firmly at the bottom, followed by Euro and Sterling. Aussie leads, with Kiwi and Swiss Franc close behind. Yen and Loonie are holding near the middle.
In Europe, at the time of writing, FTSE is up 1.00%. DAX is down -0.88%. CAC is up 0.92%. UK 10-year yield is down -0.023 at 4.530. Germany 10-year yield is down -0.005 at 2.854. Earlier in Asia, Nikkei rose 0.03%. Hong Kong HSI rose 0.51%. China Shanghai SSE rose 0.16%. Singapore Strait Times rose 0.42%. Japan 10-year JGB yield rose 0.014 to 2.257.
US initial jobless claims tick down to 209k, vs exp 200k
US initial jobless claims fell -1k to 209k in the week ending January 24, above expectation of 200k. Four-week moving average of initial claims rose 2k to 206k.
Continuing claims fell -38k to 1827k in the week ending January 17, lowest since September 21, 204. Four-week moving average of continuing claims fell -7k to 1868k.
BoC Macklem sees forecasts more fragile amid rising uncertainty
In an interview with Reuters, BoC Governor Tiff Macklem warned that the global environment faces an unusually high risk of fresh disruptions. He said geopolitical risks are “elevated” and that the potential for new shocks has increased materially. He also cited attacks on the independence of the Fed as an added source of uncertainty this year.
As a result, he said the Bank of Canada’s latest economic projections are more “vulnerable” than usual, with “more things that can go wrong around that forecast.”
Asked whether risks later this year lean more toward a rate cut or a hike, Macklem declined to assign a directional bias. He said the level of uncertainty makes it difficult to meaningfully assess probabilities. “And, to be honest, I think we’re finding that difficult,” he added.
Macklem pointed to renewed tariff threats from the White House and the upcoming review of the US-Mexico-Canada trade framework as clear risks to the outlook, on top of broader global uncertainties.
The comments followed the BoC’s decision this week to keep rates on hold and publish updated forecasts that continue to show modest growth in 2026 and 2027, broadly unchanged from October.
EU and Eurozone economic sentiment jumps as confidence broadens Into 2026
Economic sentiment in Europe improved sharply in January, with the Economic Sentiment Indicator rising 1.9 points to 99.2 in the EU and 2.2 points to 99.4 in the Eurozone. The readings mark the closest approach to the long-term average of 100 since mid-2022, signaling a meaningful improvement in confidence at the start of 2026.
Labor outlook strengthened alongside sentiment. Employment Expectations Indicator climbed to its highest level in 12 months in both the EU (99.1) and the Eurozone (98.2), suggesting firms are becoming more confident about near-term hiring despite lingering macro uncertainty.
The improvement was broad-based. Confidence rose across industry, services, retail trade, and among consumers, with construction the only sector showing a marginal decline. Country data also highlights the breadth of the rebound, with notable gains in all six largest EU economies: France (+5.8), Germany (+3.0), Poland (+2.9), Netherlands (+2.3), Spain (+1.7) and Italy (+1.3), pointing to a region-wide uplift rather than isolated strength.
NZ ANZ business confidence eases to 64.1, pricing signals turn hotter
New Zealand’s ANZ Business Confidence eased in January, slipping from a 30-year high of 73.6 to 64.1. While the decline looks notable, confidence remains at a very strong level historically. The own activity outlook also moderated, falling from 60.9 to 51.6, pointing to some loss of momentum after December’s surge. According to ANZ, the coming months will be key in determining whether growing talk of rate hikes begins to weigh on activity.
The more important signal came from inflation indicators, which moved decisively higher. The net share of firms expecting to raise prices in the next three months rose 5 points to 57%, the highest reading since March 2023. Firms also expect to raise prices by 2.1%, up from 1.8%, marking the fastest pace in two years. Wage pressures are beginning to lift modestly, while inflation expectations reached their %, highest level in 15 months.
ANZ described the results as a mix of “good news and bad news,” warning that the inflation signals are not consistent with forecasts from either the bank or the RBNZ. Explanations include faster margin recovery or less spare capacity than assumed. ANZ still forecasts the first OCR hike in December, but cautioned that if pricing intentions show up in hard data, tightening could come earlier.
New Zealand exports and imports jump 15% yoy in December
New Zealand recorded a modest but better-than-expected trade surplus of NZD 52m in December, exceeding forecasts for a NZD 40m surplus. According to Stats NZ, goods exports jumped 15% year-on-year to NZD 7.7B, while goods imports rose by a similar 15% to NZD 7.6B, reflecting strong two-way trade flows at year-end.
Export growth was broad-based across key trading partners. Shipments to Australia rose NZD 204m (26% yoy), while exports to the EU increased NZD 120m (31%). Exports to China, New Zealand’s largest market, grew a more modest 4.6%, while gains were also recorded to the US (4.8%) and Japan (15%).
On the import side, increases were led by China, with imports up NZD 381m (27% yoy), followed by the EU (26%) and Australia (27%). In contrast, imports from the US fell -16% yoy, offering some offset to the overall rise.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3755; (P) 1.3802; (R1) 1.3854; More…
GBP/USD is extending consolidations below 1.3867 temporary top and intraday bias stays neutral. Downside should be contained by 1.3641 to bring another rally. Firm break of 100% projection of 1.3008 to 1.3567 from 1.3342 at 1.3901 will pave the way to 161.8% projection at 1.4246, which is close to 1.4248 key structural resistance. However, break of 1.3641 will turn bias to the downside for deeper pullback.
In the bigger picture, rise from 1.0351 (2022 low) is resuming by breaking through 1.3787 high. Further rally should be seen to 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.
