US President Donald Trump today finally named former Fed Governor Kevin Warsh to succeed Jerome Powell as Fed Chair, bringing an end to a prolonged and unusually turbulent succession process. Trump praised Warsh publicly, calling him a future “great” Fed chairman and signaling confidence in his leadership.
The announcement removed a major overhang for markets that had been grappling with rising concern over institutional credibility and political interference at the central bank. Warsh, a former Fed governor, is widely viewed as an orthodox and experienced policymaker, which has helped restore a degree of confidence in the Fed’s longer-term independence.
In policy terms, the appointment is not expected to derail the Fed’s existing outlook. The latest dot plot already signals scope for at least one rate cut later this year, and Warsh is not seen as an obstacle to that path. Instead, his selection is interpreted as favoring continuity rather than confrontation.
That partial restoration of institutional confidence showed up quickly in precious metals. After surging to record highs above 5500 earlier in the week, gold slipped back below the 5,000 psychological level, as traders locked in profits following an extreme rally fueled by policy and political risk. Silver also saw a sharp reversal, dropping back below 100 after briefly trading above 120. The pullback suggests that some of the most aggressive hedging and speculative positioning tied to institutional fears has eased, at least temporarily.
Despite these developments, Dollar has failed to mount a convincing rebound. While downside momentum has slowed, the greenback remains the worst performer of the week so far. In relative terms, Kiwi leads the FX board, followed by Aussie and Swiss Franc, while Yen and Loonie sit in the middle. The Dollar’s inability to capitalize on the Fed succession news suggests markets see the development as stabilizing—but not yet sufficient to reverse the longer-running diversification away from US assets.
US PPI jumps 0.5% mom in December as services drive cost pressures
US producer prices rose sharply in December, with PPI up 0.5% mom, well above expectations of 0.2% mom. The increase was driven almost entirely by services, where prices climbed 0.7% mom on the month. In contrast, goods were flat.
Excluding food, energy, and trade services, core PPI rose 0.4%, marking the eighth consecutive monthly increase.
On an annual basis, PPI held at 3.0% yoy, above expectations of slowing to 2.7% yoy.
Canada GDP stalls in November as manufacturing drag offsets modest service growth
Canada’s economy stalled in November, with GDP flat at 0.0% mom and undershooting expectations for a modest 0.1% mom increase. The drag came from goods-producing industries, which fell -0.3% mom, marking the third decline in four months. Manufacturing and agriculture, forestry, fishing and hunting were the main contributors to the contraction.
By contrast, services-producing industries edged up 0.1% mom, supported by gains in retail trade, education, and transportation and warehousing. Overall, 10 of 20 sectors expanded.
Early indications point to a 0.1% mom rise in December GDP, with manufacturing and wholesale trade offsetting weakness in mining and energy—suggesting growth remains fragile but not rolling over.
Eurozone GDP beats expectations with 0.3% qoq growth, Q4 ends on firmer note
The Eurozone economy ended 2025 on slightly firmer footing, with GDP rising 0.3% qoq in Q4, modestly above expectations of 0.2%. Growth in the wider European Union matched that pace. On an annual basis, GDP expanded 1.3% yoy in the Eurozone and 1.4% yoy in the EU, easing slightly from Q3 but still consistent with a slow and uneven recovery.
Country-level figures showed a broadly constructive picture. Lithuania (+1.7%) led quarterly gains, followed by Spain and Portugal (both +0.8%), while Ireland (-0.6%) was the only member state to record a contraction. Year-on-year growth was positive in the vast majority of reporting countries, highlighting resilience despite ongoing structural and policy headwinds.
Swiss KOF falls to 102.5, but outlook remains above average
Switzerland’s KOF Swiss Economic Institute Economic Barometer eased from 103.6 to 102.5 in January, undershooting expectations of 103.2. Despite the pullback, the index remains comfortably above its medium-term average, suggesting the outlook has softened but is far from weak.
The decline was driven mainly by deterioration in hospitality and construction, where confidence faded at the start of the year. By contrast, sentiment improved in manufacturing as well as financial and insurance services, helping to cushion the overall slowdown.
Within the producing sector, signals were mixed. Employment prospects, profit expectations, exports, and assessments of production constraints came under pressure. However, brighter readings for order backlogs, general business conditions, and competitive positioning point to underlying resilience, reinforcing the view of moderation rather than a sharp downturn.
Tokyo CPI slows to 2% on fuel subsidies, BoJ normalization path intact
Japan’s January Tokyo core CPI (excluding fresh food) eased from 2.3% to 2.0% yoy, undershooting expectations of 2.2% and marking a 15-month low. Core-core CPI (excluding fresh food and energy) also eased from 2.3% to 2.0% yoy. Headline inflation slowed more sharply from 2.0% to 1.5%.
The slowdown was driven largely by one-off factors. Food inflation excluding fresh food decelerated for a fifth straight month, while energy prices fell -4.2% yoy after gasoline subsidies and the abolition of a provisional fuel tax surcharge. Gasoline prices dropped -14.8%, with electricity and city gas bills also declining. Base effects from last year’s food price surge further weighed on the data.
Despite the softer print, the figures are unlikely to derail the BoJ’s normalization. While fuel subsidies may push core inflation below target in coming months, policymakers are expected to focus on whether firms continue to pass through higher import costs from a weak yen—an outcome that would keep underlying inflation pressures alive.
Japan’s industrial production fall -0.1% mom in December, consumption falters
Japan’s industrial production edged down -0.1% mom in December, a milder decline than expected -0.4% mom and consistent with a sector struggling for direction rather than deteriorating sharply. The Ministry of Economy, Trade and Industry maintained its assessment that output “fluctuates indecisively,” reflecting uneven momentum across industries.
Forward-looking guidance from manufacturers remains volatile. Firms surveyed expect output to jump 9.3% in January, followed by a 4.3% decline in February, highlighting stop-start dynamics rather than a clear recovery trend.
Sector performance was split, with declines in production machinery, chemicals, and paper products offset by gains in general machinery, electronics, and motor vehicles. Supply-side indicators pointed to some imbalance. Industrial shipments fell -1.7%, while inventories rose 1.0%, suggesting demand has not kept pace with production and raising the risk of further output adjustments if sales do not improve.
That concern was reinforced by a sharp disappointment in consumption. Retail sales fell -0.9% yoy in December, far below expectations for a 0.7% increase.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.7620; (P) 0.7663; (R1) 0.7686; More….
USD/CHF is still bounded in tight range above 0.7603 and intraday bias remains neutral. With 0.7792 resistance intact, outlook remains bearish. On the downside, break of 0.7603 will resume the larger down trend to 0.7382 projection level next. However, firm break of 0.7792 will turn bias back to the upside, for stronger rebound to 0.7860 support turned resistance and above.
In the bigger picture, larger down trend from 1.0342 (2017 high) is still in progress and resuming. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8184) holds.
