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In focus today

Today, the US JOLTs labour turnover data for December will be released. The number of job openings, a key measure of labour demand for the Fed, has stabilised in recent months following a steady decline since 2022. The Fed's Daly and Bostic are scheduled to speak in the evening.

In Sweden, the Minutes from last week's Riksbank meeting will be released at 9:30 CET. The meeting resulted in a unanimous decision to cut rates by 25bp. Despite no dissenters, the Board is divided, where governor Thedéen is in the hawk camp. The Minutes will give interesting insights into their reasoning, including what lies in the assessment that the "forecast for the policy rate made in December essentially holds [...]".

Yesterday, we published a research piece in which we discuss tensions in the Arctic. We think Donald Trump's strong interest towards Greenland is not surprising when you consider the ever-deepening Sino-Russian collaboration, the gradually increasing activity on northern waterways, and the business interests of Trump's inner circle in the Arctic.

New feature from the Danske Bank Global Research team: Personal customers in Denmark, Sweden and Finland now have access to a selection of research articles in Danske Bank's Mobile App. You will find the new feature under Investments.

Economic and market news

What happened overnight

North America and tariffs, just hours before tariffs on Mexico and Canada were set to take effect, Trump agreed to immediately pause the anticipated tariffs for one month with Mexico and Canada, averting a damaging trade war in the region. This comes as Mexico and Canada have agreed to enhance border enforcement to combat drug trafficking. Consequently, market sentiment improved on the headlines from both Mexican, Canadian and US officials.

China and the US, the 10% tariff levied on China is set to take effect today. This morning, China's finance ministry announced a package of tariffs including a 15% tariff on US coal and LNG, and a 10% tariff on crude oil, farm equipment and some autos. These new tariffs are scheduled to take effect on 10 February.

What happened yesterday

In the euro area, HICP inflation increased to 2.5% y/y in January, slightly above expectations (cons: 2.4%, prior: 2.4%). The increase was entirely due to energy inflation while food declined. Core inflation was unchanged at 2.7% (cons: 2.6%, prior: 2.7%). The January inflation print showed the same picture as in the many last months with a continued softer momentum in underlying inflation amid energy prices affecting the headline reading. We also got euro area PMI, which climbed to 46.6 in January, as the manufacturing industry showed some signs of stabilisation, bringing PMI closer to the 50-mark separating growth from contraction.

In France, the French prime minister passed another part of the 2025 budget through parliament without a majority, exposing him to a no-confidence vote on Wednesday. The Socialist Party plans to abstain, and the far-right National Rally previously supported the budget, suggesting the Prime Minister may survive. However, uncertainty remains due to potential defiance from Socialist members and the RN's unconfirmed stance.

In the US, the ISM January manufacturing PMI rose to 50.9 (cons: 49.8, prior: 49.3) showcasing a strong performance and marking the highest reading since September 2022. Increases were observed in production, prices paid, employment and new orders. Especially a strong uptick in order-inventory balances according to both PMI and ISM, which signals positive momentum for manufacturing growth.

In Sweden, the manufacturing PMI for January rose to 52.9 (prior: 52.4), marking the sixth consecutive month in the growth zone, above the 50-mark. This stands out, as France and Germany remained below the 50-mark for January.

Equities: Global equities were lower yesterday by approximately 1%, with cyclicals underperforming defensives. It was a classic risk-off mode following the tariff announcement from Trump. However, please also note the relatively small magnitude of the drop and the rebound following the postponement of tariffs against Mexico and Canada. While the uncertainty persists, we also draw the conclusion that this is more than ever a president who is open to discussion, hence often barking much more than he bites. In the US yesterday, Dow -0.3%, S&P 500 -0.8%, Nasdaq -1.2% and Russell 2000 -1.3%. As Trump is set to speak with China later today on tariffs, hopes are that we will see a softer outcome on tariffs against China. Consequently, Asian markets are rebounding sharply this morning, led by China. US and European futures are marginally higher this morning.

FI: The potential trade war between US and Mexico and Canada has been delayed as the tariffs on both Mexican and Canadian goods have been delayed a month after Mexico promised to send more troops to the border between US and Mexico and Canada would introduce a new government official that will deal with problems on fentanyl (a fentanyl-Czar). This is good news for the bond market.

FX: The best performers among major currencies since Friday is ... MXN, BRL an CAD. Well, that is one way of summarising the recent buzz and heightened volatility following the US tariff news being 'on' and then (for now) 'off'. Yesterday, a deal was struck between the US and Mexico which delays the tariffs for 30 days to give time for negotiations - the MXN rallied on the news after previously being sold off. Late Monday night, a similar deal was stuck between the US and Canada, which was followed by a 1.3% drop in USD/CAD. EUR/USD still hovers around 1.03. EUR/NOK has erased yesterday's losses, now at 11.75. The SEK holds on to gains vs EUR at 11.46. EUR/DKK is stable.

Daily Pivots: (S1) 190.89; (P) 191.87; (R1) 193.72; More...

GBP/JPY recovered ahead of 189.31 support and intraday bias is turned neutral. On the downside, firm break of 189.31 will suggest that corrective pattern from 180.00 has completed. But before that, the pattern could still extend. Break of 194.73 will bring stronger rebound instead.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 158.66; (P) 159.40; (R1) 160.83; More...

EUR/JPY recovered after dipping to 157.96 and intraday bias is turned neutral first. Overall outlook is unchanged that consolidation pattern from 154.40 could still extend. On the downside, below 157.96 will target 156.16 support. However, break of 161.48 will turn bias back to the upside for 164.07 resistance.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8284; (P) 0.8315; (R1) 0.8339; More...

EUR/GBP's fall from 0.8472 is in progress and intraday bias stays on the downside. Corrective rebound from 0.8221 should have completed already. Deeper decline would be seen to retest this low. On the upside, above 0.8535 minor resistance will turn intraday bias neutral first.

In the bigger picture, a medium term bottom should be in place at 0.8221, just ahead of 0.8201 key support (2022 low). Sustained trading above 55 W EMA (now at 0.8442) will pave the way to 0.8624 cluster zone (38.2% retracement of 0.9267 to 0.8221 at 0.8621), even just as a correction to the down trend from 0.9267 (2022 high). But still, medium term outlook will be neutral at best as long as 0.8621/4 holds.

Daily Pivots: (S1) 1.6536; (P) 1.6664; (R1) 1.6738; More...

EUR/AUD's consolidation from 1.6800 is extending with another falling leg and intraday bias remains neutral. Strong support is expected from 38.2% retracement of 1.5963 to 1.6800 at 1.6480 to contain downside. On the upside, firm break of 1.6800 will resume the rally from 1.5963. However, sustained break of 1.6480 will bring deeper correction 61.8% retracement at 1.6283 instead.

In the bigger picture, EUR/AUD is holding on to 1.5996 key support (2024 low) despite brief breach. Larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.

Daily Pivots: (S1) 0.9376; (P) 0.9398; (R1) 0.9436; More....

EUR/CHF recovered after dipping to 0.9359 and intraday bias is turned neutral first. Risk will now stay on the downside as long as 0.9516 resistance holds. Corrective rebound from 0.9204 might have completed at 0.9517 already. Firm break of 0.9336 support will solidify this bearish case and target a retest on 0.9204 low.

In the bigger picture, current development argues that rebound from 0.9204 has completed as a corrective move after failing to sustain above 38.2% retracement of 0.9928 to 0.9204 at 0.9481. Firm break of 0.9204/9 support zone will confirm larger down trend resumption.

Daily Pivots: (S1) 1.0252; (P) 1.0301; (R1) 1.0391; More...

EUR/USD recovered ahead of 1.0176 support and intraday bias is turned neutral first. Outlook will stay bearish as long as 1.0531 resistance holds. On the downside, decisive break of 1.0176 will resume whole fall from 1.1213. Next target will be 61.8% projection of 1.1213 to 1.0176 from 1.0531 at 0.9890.

In the bigger picture, immediate focus is back on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. For now, risk will stay on the downside as long as 1.0531 resistance holds, in case of rebound.

Daily Pivots: (S1) 1.2314; (P) 1.2385; (R1) 1.2520; More...

Intraday bias in GBP/USD remains neutral for the moment. Corrective rebound from 1.2099 could extend further with another rise. But strong resistance should be seen from 38.2% retracement of 1.3433 to 1.2099 at 1.2609 to limit upside. Below 1.2248 will bring retest of 1.2099 low first. Firm break there will resume whole decline from 1.3433.

In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

Daily Pivots: (S1) 0.9065; (P) 0.9131; (R1) 0.9169; More…

Intraday bias in USD/CHF is turned neutral as it retreated ahead of 0.9200/9223 resistance zone. Further rally is still expected as long as 0.8694 support holds. Firm break of 0.9200/9223 will carry larger bullish implication. Next near term target will be 100% projection of 0.8735 to 0.9200 from 0.8964 at 0.9429.

In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.

Daily Pivots: (S1) 153.91; (P) 154.90; (R1) 155.79; More...

Range trading continues in USD/JPY above 153.70 and intraday bas remains neutral. Deeper fall is mildly in favor as long as 156.74 resistance holds. Break of 153.70 will resume the fall from 158.86 to 38.2% retracement of 139.57 to 158.86 at 151.49. Nevertheless, break of 156.74 resistance will indicate that fall from 158.86 has completed as a correction. Intraday bias will be back on the upside for 158.86 and above to resume the whole rally from 138.57.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.