The dollar is slightly firmer to start the new day as it bounces back a little following Trump’s inauguration. His comments that “we’re thinking in terms of 25% on Mexico and Canada” on tariffs is causing a bit of a stir in the new day. But overall, the strong rally to start the year has been sapped out with Treasury yields also sliding lower since last week.
The likes of EUR/USD, GBP/USD, and AUD/USD are all trading back above their respective 100 and 200-hour moving averages, highlighting a shift in the near-term bias. Dollar buyers are no longer in control but the reversal moves so far have been light.
USD/CAD is a standout after Trump’s tariffs warning and that is also getting broader markets to be a bit more cautious in ruling out any softer stance on the matter globally. The pair is up 0.8% to above 1.4400 again but well off the high earlier of 1.4515.
So, that is all keeping traders on their toes as we look to the session ahead. Is the supposed tariffs reprieve that markets are sensing going to prove temporary?
Looking to European trading, UK labour market data is the key highlight on the agenda. ONS still has to iron out the kinks in their data accuracy and that will continue to make it a challenge in interpreting the data. For now, traders are pricing in ~83% odds of a BOE rate cut in two weeks’ time. I wouldn’t expect the labour market figures today to have much sway on that given ONS’ issues. But we’ll see.
0700 GMT – UK November ILO unemployment rate, employment change
0700 GMT – UK November average weekly earnings
0700 GMT – UK December payrolls change
1000 GMT – Germany January ZEW survey current conditions, economic sentiment
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.