THE ETERNAL SOVEREIGN

Tag: inflation

  • US Investigation Centers on Powell’s Testimony to Congress

    WASHINGTON — On January 12, former Federal Reserve chairpersons strongly condemned the ongoing U.S. criminal investigation into current Fed Chair Jerome Powell, describing it as an “unprecedented attempt” to undermine the central bank’s independence.

    Two Republican senators also criticized the Trump administration and questioned the Justice Department’s credibility in pursuing charges against Powell, whom President Trump has long aimed to replace amid his push for lower interest rates.

    On January 11, Powell disclosed that the Federal Reserve had received grand jury subpoenas and faced threats of a criminal indictment related to his Senate testimony from June.

    The controversy centers on a $2.5 billion (S$3.2 billion) renovation project for the Federal Reserve’s headquarters. In 2025, President Donald Trump suggested he might dismiss Chair Jerome Powell due to cost overruns related to the historic building’s refurbishment.

    On January 12, former Fed Chairs Ben Bernanke, Alan Greenspan, and Janet Yellen, along with other ex-economic leaders, publicly criticized the Department of Justice’s investigation.

    In a joint statement, they condemned the probe as “an unprecedented attempt to use prosecutorial attacks” aimed at undermining the Fed’s independence.

    The statement added, “This is typical of how monetary policy is conducted in emerging markets with fragile institutions, often resulting in severe inflation and broader economic dysfunction.”

    “Such practices are unacceptable in the United States.”

    In an unusual statement on January 11, Mr. Powell criticized the administration, calling the building renovation and his congressional testimony mere “pretexts.” “The possibility of criminal charges stems from the Federal Reserve’s commitment to set interest rates based on its best judgment of the public’s interest, rather than aligning with the president’s preferences,” Powell stated.

    He pledged to perform his duties “without political fear or favor.”

    Separately, New York Fed President John Williams noted that historically, political interference in monetary policy often results in “unfortunate” consequences such as inflation.

    Stocks Reach New All-Time Highs

    Despite concerns triggered by the investigation, U.S. stock indices closed at record highs.

    Bernard Yaros, lead U.S. economist at Oxford Economics, noted, “The fact that market-based inflation expectations have stayed steady suggests that investors are largely dismissing the probe as having little or no effect on the Fed’s independence.”

    The Federal Reserve operates independently with a dual mandate to maintain price stability and low unemployment. Its primary tool is adjusting the benchmark interest rate, which influences U.S. Treasury yields and borrowing costs.

    President Trump has frequently criticized Powell, labeling him a “numbskull” and “moron” for the Fed’s policy choices and not cutting rates more aggressively.

    On January 12, White House spokeswoman Karoline Leavitt told Fox News that Powell “has proven he’s not very good at his job.” Regarding whether Powell is a criminal, she added, “That’s a question the Department of Justice will have to answer.”

    Republicans Push Back Against Investigation

    The Justice Department’s investigation has faced backlash from across the political spectrum.

    On January 11, Republican Senator Thom Tillis, a member of the Senate Banking Committee, pledged to block the confirmation of any Federal Reserve nominee—including the next Fed chair—until the legal issue is “fully resolved.”

    He stated, “The independence and credibility of the Department of Justice are now at stake.”

    Another Republican senator, Lisa Murkowski of Alaska, backed Thom Tillis’ stance, describing the investigation as “nothing more than an attempt at coercion.”

    Earlier, Senate Majority Leader Chuck Schumer, a leading Democrat, criticized the probe as an assault on the Federal Reserve’s independence.

    David Wessel, a senior fellow at the Brookings Institution, warned of serious risks if the Fed were to come under President Trump’s influence.

    Politicians might be tempted to keep interest rates low to stimulate the economy before elections, while an independent Fed is expected to set policy focused on controlling inflation and maximizing employment.

    Wessel told AFP that if Trump succeeds in swaying the Fed, the U.S. could face higher inflation and reduced willingness from global investors to finance the Treasury.

    Powell was originally nominated as Fed chair by Trump during his first term. His chairmanship ends in May, but he may remain on the Fed board until 2028. In 2025, Trump also attempted to remove Fed Governor Lisa Cook over allegations of mortgage fraud.

    Sources: Bloomberg

  • Silver Price Outlook: XAG/USD Climbs Toward $90 as Geopolitical Tensions Mount

    Silver prices hit a new all-time high approaching $90.00 amid escalating tensions as the U.S. threatens military action in Iran. Meanwhile, leaders of major global central banks have criticized Washington for undermining the Federal Reserve’s independence. Despite this, the U.S. dollar rebounded sharply after these central bank chiefs expressed strong support for Fed Chair Jerome Powell.

    Silver (XAG/USD) continued its winning streak for a fourth consecutive trading day on Wednesday, rallying close to $90.00 during the Asian session. The white metal’s advance is supported by sustained demand for safe-haven assets amid ongoing geopolitical tensions.

    In Iran, widespread civil unrest driven by soaring inflation, a sharp depreciation of the Rial against the US Dollar, and government corruption has led to the deaths of hundreds of protesters calling for political change.

    In response, U.S. President Donald Trump has threatened military action against Tehran if the Iranian government continues to kill protesters.

    Meanwhile, concerns over the Federal Reserve’s independence have intensified following criminal charges against Chairman Jerome Powell related to alleged mismanagement of funds for renovating Washington’s headquarters. Powell dismissed the charges as a “pretext,” attributing them to the Fed’s decision to set interest rates based on public interest rather than presidential preferences. These developments kept safe-haven assets in demand.

    The news initially caused a sharp drop in the U.S. dollar, with experts warning that any threat to the Fed’s autonomy could negatively impact the country’s sovereign credit rating. However, the dollar quickly recovered after top officials from global central banks expressed strong support for Powell amid his dispute with President Trump.

    “We stand in full solidarity with the Fed System and its Chair Jerome H. Powell,” said leaders of the European Central Bank, Bank of England, and nine other major institutions in a joint statement on Tuesday.

    Silver technical analysis

    XAG/USD is trading higher near $90.00 at the time of writing, with strong buying momentum pushing the price further into overbought territory.

    The 14-day Relative Strength Index (RSI) has risen to 74.77 from 72.52, signaling increasing bullish momentum. Although the trend remains upward, the overextended conditions may limit further gains and lead to a period of consolidation.

    A slight pullback in momentum, with the RSI retreating closer to the 70 level, could provide a healthy reset and support a more gradual upward move. However, if the RSI accelerates again toward the previous high near 85.90, the rally may face a sharper correction due to rising momentum fatigue.

    Sources: Bloomberg

  • Asia FX weakens amid caution over Trump tariff threats, Iran tensions, and questions surrounding the Fed’s autonomy

    Most Asian currencies weakened on Tuesday, with the Japanese yen falling to a one-year low, as higher oil prices fueled by unrest in Iran pressured the region. Meanwhile, new political and trade developments in the United States dampened investor sentiment.

    The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, rose 0.1% after a slight decline in the previous session. Dollar Index futures were also up 0.1% as of 03:36 GMT.

    Japan’s currency drops to a one-year low following news of a possible snap election

    The yen was the worst-performing currency, as USD/JPY climbed 0.4% to 158.76, its highest level since January 2025. The currency came under pressure after reports suggested that Prime Minister Sanae Takaichi could call a snap election as early as February. Investors speculated that a potential election win would strengthen her mandate for expansionary fiscal policies, further weighing on the yen.

    Markets focus on Trump’s tariff threat, unrest in Iran, and higher oil prices

    Risk appetite across Asia stayed cautious following U.S. President Donald Trump’s announcement of a 25% tariff on goods from countries “doing business” with Iran, though specifics on timing and coverage remain unclear.

    Meanwhile, oil prices rose further amid deadly anti-government protests in Iran, sparking concerns over potential supply disruptions. The unrest has also led to warnings of possible military intervention from Trump, heightening geopolitical risk premiums.

    MUFG analysts noted that Asian currencies may have been negatively affected by recent rises in oil prices, driven by events in both Venezuela and Iran.

    They added that, aside from China, countries like Turkey, the United Arab Emirates, and to a lesser extent Russia and India, maintain some trade connections with Iran.

    In Asia, the South Korean won (USD/KRW) rose 0.4%, marking its seventh consecutive gain. The Indian rupee (USD/INR) increased slightly by 0.1%, while the Singapore dollar (USD/SGD) remained stable. In China, the onshore yuan (USD/CNY) showed little movement, whereas the offshore yuan (USD/CNH) edged up 0.1%. The Australian dollar (AUD/USD) traded mostly flat.

    Concerns over Fed independence trigger risk-averse sentiment

    The Trump administration has launched a criminal probe into Federal Reserve Chair Jerome Powell regarding his testimony about renovation activities at the central bank’s headquarters, raising concerns about the Fed’s independence.

    In response, Powell issued a statement affirming the Fed’s autonomy and assuring that policy decisions will remain based solely on economic data and the central bank’s mandate. Several former Fed chairs and senior officials have publicly expressed their support for Powell.

    “It’s a wait-and-see situation as markets attempt to gauge the actual impact of these developments,” noted analysts from ING in a recent report.

    Despite a softer U.S. dollar, Asian currencies found it difficult to gain, as investors remained focused on broader U.S. political risks, trade uncertainties, and rising oil prices.

    Focus is also shifting to upcoming U.S. economic reports and any indications from the Federal Reserve, as market participants reevaluate interest rate forecasts amid increased political scrutiny of the central bank.

    Sources: Investing

  • Upcoming Economic Week: Inflation and Retail Sales to Shape Fed Policy Outlook

    If economists were meteorologists, this week’s forecast would predict a data blizzard. However, clarity is expected to improve as markets receive highly anticipated reports on inflation, retail sales, and industrial production ahead of the Federal Reserve’s policy meeting on January 28.

    Few economists expect Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) to ease monetary policy again later this month—and neither do we. This week’s data could either confirm or challenge that view, starting with the December consumer price index report on Tuesday.

    The Fed drama intensified last week after President Donald Trump instructed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds—an action typically undertaken by the Fed itself. Many saw this move as an attempt to restart quantitative easing. Meanwhile, Fed Governor Stephen Miran told Bloomberg he anticipates 150 basis points of rate cuts this year.

    What’s still missing, however, is significantly lower inflation and a recession that would justify such aggressive easing. This week will also feature speeches from several Fed officials, which could provide insight into the central bank’s thinking. The lineup starts with New York Fed President John Williams on Monday, followed by Governors Miran (Wednesday), Michael Barr (Thursday), Michelle Bowman (Friday), and Vice Chair Philip Jefferson (Friday).

    Here’s a rundown of this week’s key data releases likely to influence the timing and scale of any future Fed rate cuts:

    Inflation

    Since the 43-day government shutdown in October and November, investors have struggled to gauge inflation accurately. The 2.7% year-over-year CPI rise in November, a slight dip from October’s 3.0%, was met with caution, as the shutdown likely disrupted the Bureau of Labor Statistics’ data gathering.

    This increases the importance of the upcoming CPI and PPI reports, which will be key indicators before the FOMC’s January 28 interest rate decision.

    The upcoming CPI report on Tuesday is expected to show a modest easing in inflation, with the Cleveland Fed’s model forecasting a 0.2% monthly increase and 2.6% year-over-year growth. The November PPI report, due Wednesday, is considered less impactful, while import and export price data for November will be released on Thursday.

    Retail sales

    Retail sales (Wednesday) are expected to show a slight increase in November after remaining flat in October (see chart). Overall, we believe consumer spending remains resilient despite rising living costs and soft employment figures. Additional important demand indicators this week include December existing home sales (Wednesday) and mortgage applications for the week ending January 9 (Wednesday).

    Jobless claims

    We anticipate layoffs will stay minimal, which has been the key insight from recent initial unemployment claims data (Thursday) (see chart). While demand for labor may be slowing in certain sectors, the feared AI-driven collapse in the job market has not materialized yet.

    Composite economic indicators & business surveys

    The composite cyclical indicators for December, due Thursday, are expected to show the coincident index holding at a record high, while the (mis)leading index continues its decline. Additionally, given delays in official hard data, the National Federation of Independent Business’ Small Business Optimism Index for December (Tuesday) should provide valuable insights, following its rise to 99 in November. Later in the week, the Federal Reserve banks of New York and Philadelphia will release their January business surveys (Thursday).

    Our preferred coincident indicator is the S&P 500 forward earnings per share, which has accelerated in recent weeks and hit record highs (see chart).

    Sources: Investing

  • Australian Dollar Gains as US Dollar Weakens Amid Fed Probe

    • The Australian Dollar ended its three-day slide on Monday.
    • ANZ reported a 0.5% decline in job advertisements for December, following a revised 1.5% drop in the previous month.
    • Meanwhile, the US Dollar weakened after federal prosecutors launched a criminal investigation into Federal Reserve Chair Jerome Powell.

    The Australian Dollar (AUD) gained ground against the US Dollar (USD) on Monday, reversing a three-day losing streak. The AUD/USD pair rose as the Greenback weakened, partly due to growing concerns about the Federal Reserve.

    Federal prosecutors have launched a criminal investigation into Fed Chair Jerome Powell, focusing on the central bank’s renovation of its Washington headquarters and allegations that Powell may have misled Congress about the project’s details, according to a New York Times report on Sunday.

    ANZ Job Advertisements fell by 0.5% in December, following a revised 1.5% decline in November. Meanwhile, household spending rose 1.0% month-on-month in November 2025, slowing from a revised 1.4% increase in October, reflecting consumer caution amid high interest rates and ongoing inflation.

    Australia’s mixed Consumer Price Index (CPI) report for November has left the Reserve Bank of Australia’s (RBA) policy direction uncertain. However, RBA Deputy Governor Andrew Hauser stated that the inflation data largely met expectations and indicated that interest rate cuts are unlikely in the near term. Attention now turns to the quarterly CPI report due later this month for clearer insight into the RBA’s upcoming policy decisions.

    US Dollar Slides Amid Federal Reserve Uncertainty

    The US Dollar Index (DXY), which tracks the Dollar against six major currencies, is weakening and trading near 98.90 amid expectations of a dovish Federal Reserve. Slower-than-anticipated US job growth in December suggests the Fed may keep interest rates steady at its upcoming January meeting.

    US Nonfarm Payrolls increased by 50,000 in December, below November’s revised 56,000 and the expected 60,000. Meanwhile, the unemployment rate fell to 4.4% from 4.6%, and average hourly earnings rose to 3.8% year-over-year from 3.6%.

    CME Group’s FedWatch tool shows about a 95% chance that the Fed will hold rates steady on January 27–28. Richmond Fed President Tom Barkin welcomed the unemployment drop, describing job growth as modest but steady. He noted hiring remains limited outside healthcare and AI sectors and expressed uncertainty about whether the labor market will see more hiring or layoffs going forward.

    US Treasury Secretary Scott Bessent told CNBC on Thursday that the Federal Reserve should continue cutting interest rates, emphasizing that lower rates are the “only ingredient missing” for stronger economic growth and urging the Fed not to delay.

    The US Department of Labor reported that Initial Jobless Claims rose slightly to 208,000 for the week ending January 3, just below expectations of 210,000 but above the previous week’s revised 200,000. Continuing claims increased to 1.914 million from 1.858 million, signaling a gradual rise in those receiving unemployment benefits.

    The Institute for Supply Management (ISM) revealed that the US Services PMI climbed to 54.4 in December from 52.6 in November, surpassing expectations of 52.3.

    ADP data showed a gain of 41,000 jobs in December, improving from a revised 29,000 job loss in November, though slightly below the expected 47,000. Meanwhile, JOLTS job openings dropped to 7.146 million in November from a revised 7.449 million in October, missing forecasts of 7.6 million.

    China’s Consumer Price Index (CPI) increased by 0.8% year-over-year in December, up from 0.7% in November but slightly below the 0.9% forecast. On a monthly basis, CPI rose 0.2%, reversing November’s 0.1% decline. Meanwhile, China’s Producer Price Index (PPI) fell 1.9% year-over-year in December, improving from a 2.2% drop the previous month and slightly beating expectations of a 2.0% decline.

    Australia’s trade surplus narrowed to 2.936 billion AUD in November, down from a revised 4.353 billion AUD in October. Exports declined 2.9% month-on-month in November, following a revised 2.8% increase the previous month. Imports edged up 0.2% in November, slowing from a revised 2.4% gain in October.

    AUD rebounds, testing upper boundary of rising channel around 0.6700

    On Monday, AUD/USD trades near 0.6700 as the pair attempts a rebound toward an ascending channel, indicating a renewed bullish outlook. The 14-day RSI at 58.33 remains above the neutral midpoint, supporting upward momentum.

    A sustained move back into the channel would reinforce the bullish trend, potentially pushing the pair toward 0.6766—the highest level since October 2024. Further upside could target the channel’s upper resistance near 0.6860.

    Immediate support is found at the nine-day EMA around 0.6700, followed by the 50-day EMA at 0.6631. A break below these levels could open the path to 0.6414, the lowest point since June 2025.

    Sources: Fxstreet

  • Asian currencies remain muted as the dollar falls amid US investigation into Fed Chair Powell

    Asian currencies remained largely steady on Monday, while the U.S. dollar weakened following the announcement of a criminal investigation involving Federal Reserve Chair Jerome Powell, casting uncertainty over the central bank’s independence.

    The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, declined 0.2% from its one-month peak. Meanwhile, U.S. Dollar Index futures were also down 0.2% as of 04:27 GMT.

    Fed Chair Powell faces threat of indictment

    Investor confidence was rattled after Powell revealed that the administration had threatened the Federal Reserve with a potential criminal indictment related to his Senate testimony about cost overruns in the Fed’s headquarters renovation.

    This development weakened trust in U.S. institutions and prompted a cautious mood across global markets, dampening risk appetite in Asia.

    In this environment, most regional currencies showed little movement.

    The Japanese yen’s USD/JPY pair edged up 0.2%, while the Singapore dollar’s USD/SGD remained flat.

    The South Korean won stood out, rising 0.7% on Monday.

    In China, the onshore yuan’s USD/CNY pair was mostly unchanged, whereas the offshore yuan’s USD/CNH dipped slightly by 0.1%.

    The Indian rupee’s USD/INR pair saw minimal change.

    Meanwhile, the Australian dollar’s AUD/USD pair rose modestly by 0.2%.

    US jobs data bolster expectations for Fed rate cuts

    Investor sentiment was also shaped by U.S. economic data released last Friday, which revealed that nonfarm payroll growth in December slowed more than anticipated.

    The weaker-than-expected hiring numbers have heightened expectations that the Federal Reserve may implement interest rate cuts later this year.

    Market pricing now factors in at least one additional Fed rate cut in 2026, with some traders anticipating two reductions.

    Attention is now turning to the U.S. consumer price index for December, due Tuesday, a key economic indicator ahead of the Fed’s upcoming policy meeting later this month.

    Sources: Investing

  • Morning Update: Powell’s Response Shakes Markets

    Ankur Banerjee provides a preview of the day ahead in European and global markets. Investors remain focused on the escalating conflict between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell, who is pushing back against attempts to exert political control over the Fed and its interest rate decisions.

    Meanwhile, growing turmoil in Iran—where over 500 people have reportedly been killed, according to human rights groups—adds to the geopolitical uncertainties shaping market sentiment at the start of 2026, supporting demand for safe-haven assets.

    Markets opened Monday with shocking news that the Trump administration had threatened to indict Powell over his Congressional testimony last summer concerning a Fed building renovation. Powell described this as a “pretext” aimed at increasing political influence over monetary policy.

    “This issue centers on whether the Fed can continue setting interest rates based on data and economic realities, or if monetary policy will instead be shaped by political pressure and intimidation,” Powell stated.

    The initial market reaction saw the dollar weaken and stock futures decline, although the impact on interest rate policy remains unclear. Gold prices surged past $4,600 per ounce as investors sought refuge.

    Despite the unsettling news, market responses were measured, with no signs of panic selling as investors await further clarity on the Fed’s independence and the future path of interest rates.

    WASHINGTON, DC – DECEMBER 13: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged. (Photo by Win McNamee/Getty Images)

    Markets may now generally anticipate that the Federal Reserve will yield to Trump’s influence and ease interest rates freely once a new Fed chair takes over after Powell’s term ends in May. Futures pricing currently reflects expectations of two rate cuts this year.

    With Japanese markets closed on Monday, no cash trading occurred in Treasuries during Asian hours. Attention will shift to the Treasury market when London trading begins.

    Key events that could impact markets on Monday include: Germany’s November current account balance and the euro zone Sentix investor confidence index for January.

    Sources: Reuters

  • Looking Back at the First 25 Years of the 21st Century

    Reflecting on the start of this century, the first striking observation is our national shortsightedness. After surviving Y2K and the dot-com crash in 2000, our leaders assumed the path ahead would be smooth sailing from year one onward.

    However, reality proved otherwise, beginning with a series of black swan events, notably the attacks on the World Trade Center and Pentagon on September 11. While such events are inherently unpredictable, it’s remarkable that the Congressional Budget Office (CBO) economists confidently forecasted in 2001 a future of continuous budget surpluses, anticipating the complete elimination of national debt by 2011.

    For reasons unknown, the CBO issues 10-year federal spending and revenue projections, despite having no solid factual or practical foundation to accurately forecast beyond a year or two—akin to trying to predict the weather a year in advance.

    The January 2001 CBO report highlights this myopia. Their projections simply extended current trends indefinitely without grounding in reality. Under this unrealistic mandate, the CBO projected a cumulative surplus of $5.6 trillion for 2002–2011.

    In reality, deficits over that decade totaled $6.1 trillion—a swing of $11.7 trillion. It would have been much simpler to just flip a plus sign to a minus. The projections failed to account for the soaring costs of Bush’s “War on Terror” post-9/11, which led to prolonged wars in Afghanistan and Iraq, the bursting of the real estate bubble, and massive TARP bailouts to rescue large banks.

    In short, this is a summary of CBO’s flawed foresight:

    The first takeaway from this bleak forecast is that the CBO economists assumed deficits would increase in a smooth, predictable fashion—almost as if they were drawing a straight line with minor fluctuations, rather than reflecting the unpredictable realities of economic growth.

    A second point is that the 2003 Bush tax cuts were not the main driver of the deficits. In fact, annual deficits dropped significantly—from $413 billion in fiscal year 2004 (which began October 1, 2003) to just $161 billion in fiscal year 2007. This means the deficit shrank by more than half during the four years following the tax cuts and before the 2007 real estate crash.

    While much of this now feels like distant history, the ongoing wars and the Federal Reserve’s drastic response to the 2008 financial crisis—keeping interest rates near zero for eight years, essentially through the entire Obama administration—contributed to massive deficits that have persisted through to today, especially in the five years following the COVID-19 pandemic.

    Since 2001, U.S. federal deficits have averaged about $1 billion annually, but that figure has surged to over $2 trillion per year since 2020, according to the U.S. Treasury.

    Today, the total federal deficit stands at $38 trillion, which amounts to roughly $110,000 owed per American—far from the anticipated surpluses once projected.

    Following a Challenging 2000–2009, Markets Surged in the First Quarter

    What about the markets? After nearly a “lost decade” lasting nine years from March 2000 to March 2009, all major market indexes have experienced remarkable growth—particularly gold relative to the U.S. dollar.

    By March 9, 2009, three of the four major indexes—the S&P 500, NASDAQ, and Russell 2000—had fallen by 50% since the decade began (while the Dow was down 40%), but they bounced back strongly from 2009 through 2025:

    Over the same 25-year period, the Consumer Price Index (CPI) increased by 83%, which means the real market gains were somewhat diminished.

    The U.S. dollar performed even worse, losing about 10% in value overall (and 8% against the euro), while gold and silver surged more than 15 times in value:

    The first-quarter returns were decent, but the strong performance of gold and silver signals that the dollar—and the CBO’s deficit forecasts—cannot be relied on in the long run. In fact, President Trump has set a goal for 2026 to deliberately weaken the dollar against the Chinese yuan to “help” exporters boost overseas sales. Much of the talk about the dominance of the “King Dollar” is just rhetoric. In reality, many politicians aim to devalue their currencies to encourage trade, turning paper money into a “race to the bottom,” while gold quietly holds its value, watching from the sidelines.

    This brings us to the 2025 summary—a major victory for precious metals as the dollar dropped by 10%.

    2025 Brought Massive Gains for Precious Metals

    The year 2025 exemplified the key trends seen over the past 25 years—while the stock market continued to climb, gold and silver surged even faster. Although inflation is easing, gold today serves less as an inflation hedge and more as a safeguard against crises, a hedge against the dollar, and increasingly, a hedge against cryptocurrency volatility.

    In 2025, the U.S. Dollar Index (DXY) dropped by 10%, allowing major global currencies to gain between 5% and 15%. Meanwhile, the poorest-performing investments of 2025 brought good news for consumers through lower food and energy prices:

    So, if 2026 mirrors the gains of 2025, it will surely be a rewarding year for most investors.

    Sources: Investing

  • GBP/CAD Holds Steady Amid Mixed Canadian Employment Data

    GBP/CAD is trading close to one-month highs as investors react to mixed employment data from Canada. Higher unemployment rates and weaker wage growth have capped gains for the Canadian dollar. Attention now turns to the upcoming UK employment and GDP reports scheduled for next week.

    The Canadian Dollar (CAD) remained largely unchanged against the British Pound (GBP) on Friday, with GBP/CAD showing little directional movement as the market reacted modestly to Canada’s latest employment data. At the time of writing, the pair is trading around 1.8636, close to a one-month high.

    Statistics Canada reported that employment increased by 8,200 jobs in December, surpassing expectations of a 5,000 job decline but significantly lower than November’s 53,600 gain. Meanwhile, the unemployment rate rose to 6.8% from 6.5%, higher than the anticipated 6.6%.

    Wage growth showed signs of slowing, with average hourly wages rising 3.7% year-over-year in December, down from 4.0% previously.

    From a monetary policy standpoint, the mixed employment report is unlikely to significantly change short-term expectations for the Bank of Canada (BoC). The market largely anticipates that the central bank will keep interest rates steady throughout most of 2026.

    While some analysts had speculated about a possible rate hike later in the year, the recent labor data—characterized by rising unemployment and slower wage growth—weighs against that possibility and supports a cautious, wait-and-see approach.

    At its December meeting, the BoC held its policy rate at 2.25%, describing it as “about the right level.” Market participants are now focused on upcoming Canadian inflation figures expected later this month, which could influence near-term monetary policy forecasts.

    In the UK, attention is shifting to key economic releases next week, including labor market data on Tuesday and the November GDP report on Thursday.

    On a broader scale, the interest rate gap between the BoC and the Bank of England (BoE) continues to favor the British Pound, maintaining upward momentum for GBP/CAD.

    Additionally, the Canadian Dollar remains sensitive to developments in the oil market. Increased U.S. regulation of Venezuelan oil supplies has raised expectations of greater global output, heightening concerns over oversupply that could pressure oil prices and weigh on the Loonie, given Canada’s role as a major energy exporter.

    Sources: Fxstreet

  • NFP Outlook: Is There Real Upside in Job Growth?

    Leading indicators suggest this month’s NFP report could exceed expectations, with headline job growth potentially landing in the 80–120K range. Read on for a deeper breakdown.

    NFP Highlights

    • Consensus forecast: +66K jobs, earnings up +0.3% m/m, unemployment rate at 4.5%.
    • Outlook: Forward-looking data point to a stronger-than-expected result, with payroll gains possibly reaching between 80K and 120K.
    • Market impact: A positive surprise could allow AUD/USD to continue its rebound toward the mid-0.6600s, or even retest former resistance now acting as support near 0.6600.

    Release timing

    The December NFP report is scheduled for Friday, January 9, at 8:30 a.m. ET.

    NFP Report Expectations

    Market participants anticipate the NFP report will show the U.S. economy added around 66K jobs, with average hourly earnings increasing 0.3% month-on-month (3.6% year-on-year) and the U-3 unemployment rate edging lower to 4.5%.

    NFP Overview

    Economic data releases are gradually normalizing after the U.S. government shutdown disrupted—and in some cases eliminated—Q4 statistics. Ahead of the latest labor market update, economists expect conditions in December to reflect a continued “low hiring, low firing” environment.

    As illustrated in the graphic below, traders are largely confident that the Federal Reserve will hold off on further rate cuts this month. Only a significant downturn in the labor market—such as a clear drop in job numbers or unemployment climbing above 4.7%—would likely undermine this confidence.

    Consequently, market reactions to the NFP release may be muted, particularly since the anticipated Supreme Court ruling on President Trump’s “emergency” tariffs—due about 90 minutes later—is likely to dominate attention.

    Another factor dampening trader response is the long-term decline in survey response rates for the NFP. As the chart below illustrates, the Bureau of Labor Statistics (BLS) has experienced a significant drop in response rates over the past decade, increasing uncertainty around the accuracy of the jobs data compared to previous years.

    Looking ahead into 2026 and beyond, readers are advised to approach all survey-based economic data with greater skepticism and to rely on a diverse range of data sources when drawing robust conclusions about the U.S. economy.

    Nonfarm Payrolls Outlook

    As our regular readers know, we rely on four historically dependable leading indicators to assess each month’s NFP report:

    • The ISM Services Employment subindex rose to 52.0 from 48.9 last month.
    • The ISM Manufacturing Employment subindex increased slightly to 44.9 from 44.0.
    • The ADP Employment report showed 41K jobs added, improving from last month’s -29K but still below economists’ forecast of 49K.
    • The 4-week moving average of initial unemployment claims dropped to 212K from 217K last month.

    Considering these data points and our internal models, the indicators suggest that this month’s NFP report could exceed expectations, with job gains potentially in the 80–120K range. However, a wide margin of uncertainty remains due to declining survey response rates.

    That said, month-to-month variations in the NFP report are notoriously unpredictable, so it’s wise not to place too much confidence in any forecast—even ours. As always, other components of the release, such as the closely monitored average hourly earnings and the unemployment rate, will also influence market reactions.

    Possible Market Response to NFP

    From a technical perspective, the US dollar is trading close to one-month highs against several major currencies but remains near the midpoint of its three-month range, resulting in a balanced risk outlook ahead of the release.

    Technical Overview of the US Dollar: AUD/USD Daily Chart

    From a technical standpoint, AUD/USD finds itself in a notable position ahead of the jobs report. Earlier this week, the pair reached a 15-month high near 0.6800 but then formed a “Dark Cloud Cover” pattern on Wednesday, indicating an intraday shift from buying to selling pressure. This reversal is further supported by a triple bearish divergence on the 14-day RSI, suggesting waning bullish momentum and reinforcing the possibility of a near-term peak.

    Should the jobs data surpass expectations, it may diminish the likelihood of a January Fed rate cut and raise doubts about March, thereby strengthening the US dollar. In that case, AUD/USD could continue its decline toward the mid-0.6600s or revisit the former resistance level, now acting as support, near 0.6600. Conversely, a strong report pushing the pair back above the 78.6% Fibonacci retracement at 0.6725 would negate the near-term bearish outlook.

    Sources: Investing @ Forex

  • Asian stocks sluggish as markets await crucial US jobs report; China’s CPI reaches highest level in 3 years

    Most Asian stock markets saw modest gains on Friday, following a mixed close on Wall Street as investors remained cautious ahead of crucial U.S. jobs data that could influence expectations for future Federal Reserve interest rate cuts.

    U.S. markets closed Thursday with mixed results: technology stocks pulled back after recent advances, putting pressure on the Nasdaq, while the Dow and S&P 500 showed little movement.

    Futures for major Wall Street indexes remained mostly flat during Friday’s Asian trading session.

    Asian stocks mostly flat as Nikkei posts gains

    Asian markets showed limited movement, reflecting investor caution, with the technology sector leading declines.

    South Korea’s KOSPI index remained mostly flat after reaching record highs earlier in the week, as chipmakers Samsung Electronics (KS:005930) and SK Hynix (KS:000660) dropped between 1.5% and 3%.

    Australia’s S&P/ASX 200 gained 0.3%, while Singapore’s Straits Times Index held steady.

    Futures for India’s Nifty 50 also remained largely unchanged.

    In contrast, Japanese stocks outperformed the region, with the Nikkei 225 rising 1% and the broader TOPIX index increasing 0.3%. A weaker yen against the U.S. dollar supported exporters’ prospects.

    Looking ahead, investor attention is focused on the U.S. nonfarm payrolls report expected later on Friday, which could offer crucial insights into the health of the world’s largest economy and influence the Federal Reserve’s monetary policy outlook.

    China’s December CPI reaches highest level in 3 years, PPI deflation slows

    In China, official data released on Friday showed consumer inflation rose to its highest level in nearly three years, offering tentative signs of improving demand.

    The consumer price index increased 0.8% year on year in December, the fastest pace in about 34 months, while monthly prices rose 0.2%. At the same time, producer price deflation eased, indicating some stabilization in factory-gate prices.

    The data indicated that China could be nearing an end to a prolonged deflationary period that has dampened economic growth, squeezed corporate earnings, and restrained consumer spending.

    China’s blue-chip Shanghai Shenzhen CSI 300 index gained 0.3%, while the Shanghai Composite rose 0.6%. Hong Kong’s Hang Seng traded flat.

    Sources: Investing

  • AUD Declines Despite Careful Messaging from RBA’s Hauser

    • The Australian Dollar weakens after the trade surplus narrowed to 2,936M MoM in November.
    • The Australian Dollar weakens after the trade surplus narrowed to 2,936M MoM in November.
    • The US ISM Services PMI climbed to 54.4 in December, up from 52.6 and above the 52.3 forecast.

    The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Thursday following Australia’s Trade Balance data, which showed that the trade surplus narrowed to 2,936M MoM in November versus 4,353M (revised from 4,385M) in the previous reading.

    The Australian Bureau of Statistics (ABS) reported on Thursday that Exports fell by 2.9% MoM in November from a rise of 2.8% (revised from 3.4%) seen a month earlier. Meanwhile, Imports grew by 0.2% MoM in November, compared to a rise of 2.4% (revised from 2.0%) seen in October.

    Australia’s mixed November Consumer Price Index (CPI) has left the Reserve Bank of Australia’s (RBA) policy path unclear, shifting attention to the quarterly CPI release later this month for stronger direction.

    RBA Deputy Governor Andrew Hauser commented Thursday that November’s inflation figures were broadly in line with expectations, and noted that rate cuts are unlikely in the near term.

    Data from the Australian Bureau of Statistics (ABS) on Wednesday showed annual inflation easing to 3.4% in November from 3.8% in October. The figure came in below the 3.7% forecast but remained above the RBA’s 2–3% target band. It was the lowest print since August, with housing costs rising at their weakest pace in three months.

    US Dollar steadies amid market caution

    • The US Dollar Index (DXY), which tracks the Greenback against six major peers, is holding steady near 98.70 at the time of writing.
    • The Dollar is firm as soft recent data highlights a fragile US economy ahead of Friday’s pivotal jobs release, keeping sentiment subdued.
    • Traders are watching Thursday’s Initial Jobless Claims data, with focus shifting to Friday’s Nonfarm Payrolls report, expected to show a slowdown to 55,000 new jobs in December from 64,000 in November.
    • The ISM reported Wednesday that the US Services PMI strengthened to 54.4 in December from 52.6, beating forecasts of 52.3.
    • ADP data showed private payrolls increased by 41,000 in December, following a revised drop of 29,000 in November and slightly below the 47,000 consensus.
    • Fed Governor Stephen Miran said Tuesday the Federal Reserve may need to cut rates aggressively this year to sustain economic momentum, while Minneapolis Fed President Neel Kashkari cautioned that unemployment could “pop” higher.
    • Richmond Fed President Tom Barkin, who is not voting on policy this year, said Tuesday that rate adjustments will need to be carefully calibrated to incoming data, highlighting risks to both inflation and employment, per Reuters.
    • CME FedWatch pricing suggests an 88.9% chance the Fed will leave rates unchanged at its January 27–28 meeting.
    • China’s RatingDog Services PMI slipped to 52.0 in December from 52.1, while last week’s Manufacturing PMI ticked up to 50.1 from 49.9. Shifts in the Chinese economy are closely watched due to Australia’s deep trade ties with China.
    • November CPI in Australia was flat month-on-month, matching October. The RBA’s Trimmed Mean rose 0.3% MoM and 3.2% YoY. Seasonally adjusted Building Permits surged 15.2% MoM to nearly four-year highs of 18,406 units, rebounding sharply from October’s revised 6.1% drop. Annual permits climbed 20.2%, overturning a revised 1.1% decline.
    • The Australian Financial Review reported that the RBA may still have tightening ahead, with economists expecting sticky inflation and penciling in at least two further rate hikes.

    The Australian Dollar is holding close to 0.6700 after retreating from its 15-month peak, with AUD/USD trading near 0.6720 on Thursday

    Daily chart signals show the pair staying inside an ascending channel, maintaining a bullish structure. The 14-day RSI at 64.42 reinforces positive momentum.

    On the upside, AUD/USD could retest 0.6766 — its highest level since October 2024 — and possibly climb toward the channel’s upper boundary near 0.6840.

    Initial support is located around 0.6720 at the channel’s lower boundary, followed by the nine-day EMA at 0.6706. A break beneath that confluence area could expose downside toward the 50-day EMA at 0.6626.

    AUD/USD: Daily Chart.

    Sources: Fxstreet

  • USD/CAD climbs past 1.3850 amid ongoing worries about Canadian oil demand

    • The USD/CAD pair strengthened as the commodity-linked Canadian dollar struggled amid growing concerns over demand for Canadian oil.
    • Canada’s Prime Minister Mark Carney stated that Canadian crude remains low risk and competitive despite increasing Venezuelan exports.
    • Meanwhile, the U.S. dollar held steady as cautious market sentiment prevailed ahead of Friday’s key jobs report, influenced by fragile economic data.

    USD/CAD extended its winning streak to a fifth consecutive day, trading near 1.3860 during Asian session on Thursday. The pair strengthened as the commodity-linked Canadian dollar faced pressure following U.S. President Donald Trump’s indication of plans to resume Venezuelan crude imports, raising concerns about increased supply and intensified competition for Canadian oil demand.

    Despite this, Prime Minister Mark Carney affirmed that Canadian crude remains low risk and competitive even amid potential growth in Venezuelan exports. Carney’s office also announced his upcoming visit to China from January 13–17, aiming to diversify Canada’s export markets beyond the United States amid ongoing uncertainty over U.S. trade policy.

    Canada’s seasonally adjusted Ivey Purchasing Managers’ Index (PMI) rose to 51.9 in December 2025 from 48.4 in November, exceeding the expected 49.5 and marking a return to expansion after a month of contraction. Canada’s Trade Balance data for October is scheduled for release on Thursday.

    The U.S. dollar (USD) remained steady amid a fragile U.S. economic outlook ahead of Friday’s key jobs report, which has moderated market sentiment. The U.S. Nonfarm Payrolls (NFP) for December are forecasted to show a gain of 55,000 jobs, down from 64,000 in November.

    On Wednesday, the Institute for Supply Management (ISM) reported the U.S. Services PMI increased to 54.4 in December from 52.6 in November, beating the expected 52.3. Additionally, the Automatic Data Processing (ADP) Employment Change showed an increase of 41,000 jobs in December, following a revised loss of 29,000 jobs in November, though this was slightly below market expectations of 47,000.

    Sources: Fxstreet

  • Federal Reserve could accelerate rate cuts amid rising deflation risks

    The ISM service index suggests potential positive revisions for fourth-quarter GDP growth. On Wednesday, the Institute for Supply Management (ISM) reported that its non-manufacturing service sector index increased to 54.4 in December from 52.6 in November, marking the third consecutive month of expansion and the fastest pace of growth in over a year.

    The new orders sub-index rose sharply to 57.9 from 52.9, while business activity climbed to 56 from 54.5. Additionally, new export orders improved to 54.2, up from 48.7 in November. Out of 16 surveyed service industries, 11 showed expansion in December.

    Conversely, the ISM manufacturing index fell to 47.9 in December from 48.2 the prior month, continuing its contractionary trend for the tenth straight month (a reading below 50 indicates contraction). Only 2 of 17 manufacturing industries—Electrical Equipment, Appliances & Components, and Computer & Electronic Products—reported growth, likely supported by strong data center demand.

    ADP’s December report showed private payrolls increasing by 41,000, missing economists’ expectation of 48,000. This follows a loss of 29,000 private jobs in November, meaning just 12,000 private jobs were created over the last two months. Manufacturing shed 5,000 jobs in December, while education and health services added 39,000, and leisure and hospitality gained 24,000 jobs. Regionally, the West lost 61,000 private sector jobs, while the South led with a gain of 54,000.

    Residential investment acted as a 5.1% drag on GDP growth during the second and third quarters. Strengthening GDP going forward will depend largely on stabilizing the residential real estate market, which remains sluggish due to high mortgage rates, rising insurance costs, and an oversupply in several key areas. According to the Intercontinental Exchange, prices for U.S. condominiums dropped 1.9% in September and October, with high homeowners association (HOA) fees and insurance expenses cited as major factors. In nine major metropolitan regions, over 25% of condominiums have fallen below their original sale prices. While multiple Federal Reserve rate cuts could help support home prices, the current weakness is fueling deflationary concerns that the Fed needs to address.

    If deflation emerges from (1) weak housing and rental prices, (2) low crude oil prices, and (3) deflation imported from China and other struggling global economies, the Fed may need to implement rapid interest rate cuts totaling around 100 basis points. With President Trump expected to nominate a new Fed Chair soon, current Chair Jerome Powell is likely to become a lame duck. Minutes from the December Federal Open Market Committee (FOMC) meeting indicated at least one more 0.25% rate cut is probable, but any further deflationary signals could prompt the Fed to enact much larger reductions in key rates in the coming months.

    President Trump is expected to nominate a new Federal Reserve Chair in January who will likely reverse the Fed’s current restrictive policies and adopt a more pro-business stance. Should Kevin Hassett, the current Chair of the Council of Economic Advisors, be appointed, the Fed would gain a strong economic advocate, a development that many find promising and exciting.

    Sources: Investing

  • US Dollar: Key Data Once Again Driving the Market

    Markets are increasingly overlooking geopolitical issues—including developments in Venezuela and Greenland—while economic data is set to reclaim its role as the primary market driver in the latter half of the week. Today’s releases of ADP, JOLTS, and ISM services carry downside risks for the US dollar. Expectations of further rate cuts also point to softer FX performance in Central and Eastern Europe.

    USD: Data May Weigh on Momentum

    The impact of the Venezuela shock has largely dissipated. Although oil prices eased yesterday, they remain close to pre-4 January levels, equities continued to advance, and FX markets have shifted focus away from geopolitics. This reflects a post-“Liberation Day” tendency to ignore headlines and adopt a more measured outlook.

    The dollar recovered modestly yesterday, likely supported by seasonal inflows and a slight rise in front-end swap rates rather than geopolitical factors. Unless the US intensifies its stance on Greenland or intervenes again in Venezuela, markets are expected to re-center on macro data in the second half of the week.

    Today’s ISM services index is anticipated to be weak, but price action will likely be driven more by ADP (consensus: 50k) and the JOLTS job openings data. Notably, ADP has undershot expectations in seven of the past ten releases. Given our dovish view on the US labor market, we see upcoming employment data as carrying asymmetric downside risks for the dollar.

    Looking beyond today, our near-term outlook remains neutral to slightly constructive on the greenback.

    EUR: Inflation Risks to the Downside, but ECB Outlook Largely Unchanged

    German inflation undershot consensus yesterday, decelerating to 1.8% YoY (2.0% in EU harmonised terms). As our economist notes here, the disinflation appears broad-based – i.e., beyond the base effect – with prices falling in leisure, clothing, and food.

    That raises the chance of a sub-2.0% print today (consensus is at 2.0%) for the eurozone CPI flash estimate. Expectations are for the core CPI to remain unchanged at 2.4%, though; that is a measure that needs to start trending lower more decisively to revive any dovish dissent within the ECB.

    For now, implications for ECB rate expectations are likely to be limited unless inflation starts undershooting materially and consistently. By extension, the euro may not be taking many cues from the print and will remain almost entirely driven by the US dollar leg.

    Sources: Think.ing

  • The Australian Dollar reaches new 14-month highs, shrugging off easing inflation pressures

    • The Australian Dollar gains ground amid a hawkish outlook on the Reserve Bank of Australia (RBA).
    • Australia’s CPI slowed to 3.4% year-over-year in November, below expectations but still above the RBA’s target range.
    • Traders now turn their attention to Wednesday’s US ISM Services PMI and JOLTs job openings reports for further market cues.

    The Australian Dollar (AUD) extended its winning streak for the fourth consecutive session on Wednesday, gaining against the US Dollar (USD) despite easing inflation figures for November. Traders are now focused on the upcoming full fourth-quarter inflation report due later this month. Analysts caution that a core inflation increase of 0.9% or more could prompt the Reserve Bank of Australia (RBA) to consider further tightening at its February meeting.

    Meanwhile, the Australian Financial Review (AFR) highlighted that the RBA may not be finished with its rate hikes this cycle. A recent poll suggests inflation is likely to remain persistently high over the coming year, supporting expectations for at least two more rate increases.

    The Australian Bureau of Statistics (ABS) reported on Wednesday that Australia’s Consumer Price Index (CPI) rose 3.4% year-over-year (YoY) in November, easing from 3.8% in October. This figure missed market expectations of 3.7% but stayed above the Reserve Bank of Australia’s (RBA) target range of 2–3%. It marked the lowest inflation rate since August, with housing costs rising at their slowest pace in three months.

    Month-on-month (MoM), Australia’s CPI remained flat at 0% in November, matching October’s reading. Meanwhile, the RBA’s Trimmed Mean CPI increased 0.3% MoM and 3.2% YoY. In a separate report, seasonally adjusted building permits surged 15.2% MoM to a near four-year high of 18,406 units in November 2025, bouncing back from a downwardly revised 6.1% decline the previous month. Annual approvals jumped 20.2%, reversing a revised 1.1% drop in October.

    US Dollar declines ahead of ISM Services PMI

    The US Dollar Index (DXY), which tracks the US Dollar’s value against six key currencies, is slightly declining after posting small gains in the previous session, currently hovering near 98.50. Market participants are awaiting US economic releases that may influence Federal Reserve (Fed) policy outlooks. Later today, attention will be on the ISM Services Purchasing Managers’ Index (PMI) and JOLTs job openings data. The upcoming US Nonfarm Payrolls (NFP) report, due Friday, is forecasted to show an increase of 55,000 jobs in December, a decrease from 64,000 in November.

    Fed Governor Stephen Miran stated on Tuesday that the central bank should pursue aggressive interest rate cuts this year to bolster economic growth. Conversely, Minneapolis Fed President Neel Kashkari cautioned that unemployment could unexpectedly rise. Richmond Fed President Tom Barkin, who is not voting on this year’s rate decisions, emphasized that rate changes will need to be carefully calibrated to incoming data, pointing to risks affecting both employment and inflation targets, per Reuters.

    According to CME Group’s FedWatch tool, futures markets assign roughly an 82.8% chance that the Fed will keep rates steady at the January 27–28 meeting.

    On the geopolitical front, the US launched a significant military strike on Venezuela last Saturday. President Donald Trump announced that Venezuelan President Nicolas Maduro and his wife were captured and removed from the country. However, Maduro pleaded not guilty on Monday to US narcotics-terrorism charges, signaling a high-stakes legal confrontation with wide geopolitical consequences, Bloomberg reports.

    Traders anticipate two more Fed rate cuts in 2026. Markets also expect Trump to nominate a new Fed chair to succeed Jerome Powell when his term expires in May, potentially steering monetary policy toward lower rates.

    In China, the Services PMI from RatingDog fell slightly to 52.0 in December from 52.1 in November, while Manufacturing PMI rose to 50.1 from 49.9 the previous month. Given China’s close trade ties with Australia, shifts in the Chinese economy may affect the Australian Dollar.

    The Reserve Bank of Australia’s December meeting minutes revealed readiness to tighten monetary policy further if inflation does not ease as expected. Greater attention is now on the Q4 Consumer Price Index report scheduled for January 28, with analysts warning that a stronger-than-anticipated core inflation figure could prompt a rate hike at the RBA’s February 3 meeting.

    The Australian Dollar has reached new 14-month highs, climbing above the 0.6750 level

    On Wednesday, AUD/USD is trading near 0.6750. Technical analysis of the daily chart shows the pair moving upward within an ascending channel, indicating a continued bullish trend. However, the 14-day Relative Strength Index (RSI) at 70 signals that the pair may be overbought.

    Since October 2024, AUD/USD has hit new highs and is now aiming for the upper boundary of the ascending channel around 0.6830.

    Initial support is found at the nine-day Exponential Moving Average (EMA) near 0.6708, followed by the lower boundary of the ascending channel at about 0.6700. A drop below this combined support zone could push the pair down toward the 50-day EMA level at approximately 0.6625.

    AUD/USD: Daily Chart

    Sources: Fxstreet

  • EUR/USD slips as weak Eurozone data pressures the euro, with markets awaiting US jobs figures

    EUR/USD retreats toward 1.1710 after being rejected near 1.1740, giving back recent gains as downward revisions to Eurozone PMIs and softer German inflation renew selling pressure on the euro. With investors now awaiting key US labor market data, expectations for Federal Reserve monetary policy remain a major driver for the euro dollar exchange rate.

    EUR/USD trades in a volatile market on Tuesday, hovering around 1.1710 at the time of writing, down 0.15% on the day. The pair has surrendered earlier gains as weaker Eurozone economic data revives concerns over the region’s growth outlook.

    Selling pressure on the euro intensified after the downward revision of the Eurozone HCOB Services Purchasing Managers Index (PMI). The index was revised to 52.4 for December, below the preliminary estimate of 52.6 and down from 53.1 in November, signaling a slowdown in services sector activity—one of the main drivers of the European economy.

    Meanwhile, German inflation data released on Tuesday point to a clear easing in price pressures. Annual CPI inflation slowed to 1.8% in December from 2.3% in November, while the Harmonized Index of Consumer Prices (HICP) dropped to 2.0% from 2.6%, coming in below market expectations. These readings reinforce expectations of a more subdued inflation environment across the Eurozone, limiting near-term upside for the euro.

    On the US front, economic releases have also added to volatility in EUR/USD trading. The Services PMI was revised down to 52.5 in December, its lowest level in eight months, while the Composite PMI slipped to 52.7. According to S&P Global, softer demand, weaker new orders, and slower employment growth signal that the US economy is losing momentum, even as cost pressures remain elevated.

    As a result, expectations for US monetary policy remain a key driver of the euro-dollar pair. Fed Governor Stephen Miran said on Tuesday that upcoming data are likely to support further interest rate cuts, arguing that the Federal Reserve could lower rates by more than 100 basis points this year as current policy remains restrictive and continues to weigh on economic growth.

    Overall, EUR/USD continues to trade amid mixed macroeconomic signals from both sides of the Atlantic. With no clear near-term catalyst, price action remains uneven, while investors now turn their focus to upcoming US labor market data to better gauge the timing of potential Federal Reserve easing and the short-term direction of the US dollar.

    Sources: Fxstreet

  • Gold extends rally on Venezuela concerns, closing in on historic highs

    Gold continued its strong rally in Asian trading on Tuesday, moving back toward record territory as rising geopolitical tensions after a U.S. strike on Venezuela boosted safe-haven demand for the metal.

    Spot gold inched up 0.2% to $4,458.20 an ounce at 01:22 ET (06:22 GMT), while U.S. gold futures gained 0.4% to $4,469.10 per ounce.

    Bullion had jumped 2.7% in the previous session—its biggest one-day advance in weeks—as investors sought refuge in precious metals amid growing global market uncertainty.

    Although prices reached a record high of $4,549.71 per ounce last week before retreating on profit-taking, gold has since recovered and is again trading close to those peak levels.

    Gold jumps as U.S. action in Venezuela and Fed rate-cut expectations fuel demand

    The surge was mainly sparked by events in Venezuela, where U.S. troops carried out a surprise operation over the weekend that led to the arrest of President Nicolás Maduro, sharply intensifying geopolitical risks and unsettling commodity markets.

    Officials said Maduro was taken to the United States to face long-standing narcotics-related charges and entered a not-guilty plea in a New York court on Monday.

    According to Reuters, U.S. President Donald Trump is preparing to meet with executives from major American oil companies to discuss measures to increase Venezuela’s oil output.

    Expectations of prolonged geopolitical tensions and potential policy changes have further strengthened gold’s role as a hedge against market volatility.

    Gold also drew support from growing expectations that U.S. interest rates will continue to decline in 2026.

    Markets are now factoring in two additional Federal Reserve rate cuts this year, an environment that typically benefits non-yielding assets like gold.

    On Monday, Minneapolis Fed President Neel Kashkari noted that U.S. inflation has been easing gradually, strengthening the view that the central bank could have room to ease policy if price pressures keep moderating.

    Investors are closely tracking upcoming U.S. economic data for further signals on the Fed’s policy direction. December’s nonfarm payrolls report, due Friday, is expected to be a crucial gauge of labor market strength and could shape rate expectations in the months ahead.

    Silver and platinum climb as copper sets a new record

    Other precious and industrial metals also traded firmly higher on Tuesday.

    Silver surged 3% to $78.78 an ounce, while platinum gained 2% to $2,331.25 per ounce.

    On the London Metal Exchange, benchmark copper futures rose 2.2% to a record $13,331.0 per ton. U.S. copper futures also advanced 1.5% to $6.07 a pound, marking their highest level on record.

    According to ING analysts, copper’s continued rally has been driven by disruptions to mine supply and shifts in trade flows caused by tariffs imposed by U.S. President Trump.

    Sources: Investing