Forexlive Americas FX news wrap 30Jan:ECB cuts rates by 25 bp.Trump tariffs on Canada/Mex.

• Trump says China is going to end up paying a tariff as well
• Major US indices snap back from tariff news and closes higher
• Pres. Trump to put 25% tariff on Canada and Mexico The USDCAD spike higher
• Crude oil settled at $72.73
• Despite GDP miss, underlying US growth still around 3% — CIBC
• MUFG: Further JPY outperformance ahead as BOJ signals more rate hikes
• ECB may drop restrictive label on rate stance as soon as March – report
• European indices cheer ECB rate cut
• Trump: Do not know what led to the crash (but implies he does anyway)
• Gold touches a fresh all-time record at $2791. What’s next
• ECB sources: Policymakers expect a further cut in March followed by a deeper debate
• US December pending home sales -5.5% vs 0.0% expected
• Trump team “not even close” to making a decision on China tariffs – report
• Lagarde Q&A: We have not had a discussion on whether it’s time to stop cutting
• ECB’s Lagarde: Indicators developing towards a sustained return to our inflation target
• US initial jobless claims 207K vs 220K estimate
• US Q4 advance GDP +2.3% vs +2.6% expected
• ECB cuts key rates by 25 bps in January monetary policy decision, as expected
• The day after the FOMC rate decision will have the ECB rate decision to ponder.
• ForexLive European FX news wrap: Dollar mixed, ECB up next

The ECB cut rates by 25 basis points as expected. ECB President Christine Lagarde stated that most underlying indicators are progressing toward achieving the inflation target, with inflation expected to stabilize at the target after some fluctuations. She highlighted that the labor market remains robust and that conditions for economic recovery are in place, though risks to growth remain tilted to the downside. The ECB remains data-dependent and is not pre-committing to any specific rate path, with Lagarde confirming that there was no discussion about stopping rate cuts or a 50 basis point cut.

Lagarde emphasized that the ECB remains in restrictive territory and that future decisions will be guided by incoming data. She singled out the services sector as an upside risk to inflation but noted that it is uncertain whether rates need to go below neutral. ECB sources, as reported by Reuters, revealed expectations for another rate cut in March, followed by a broader and deeper debate on monetary policy, possibly implying a pause in April. Markets had already priced in an 84% likelihood of a March cut.

The European shares cheered the easy policy with the German Dax closing at record levels. In the US, the GDP Advanced for the 4th quarter came in at 2.3% which was right where the Atlanta Fed GDPNow model pegged the growth. It is the first cut of the data, but the quarter did not end as strong as what was once thought.

INitial jobless claims was stronger at 207K vs 220K estimate (lower jobless claims shows strong employment growth( but the week was a holiday week which could skew the data.

Pending home sales were much weaker than expectations at -5.5% vs unchanged estimates.

Pres. Trump said late in the session that he would impose a 25% tariff on Canada and Mexico imports citing border security and the smuggling of fentanyl. He however, was unsure of whether the terms would apply to oil imports.

IN the forex, the USD is ending the day mostly higher as inflation concerns from tariffs send the dollar higher (and the foreign curencies lower). The dollar rose vs all the major curencies with the expection of the JPY.

• EUR, +0.27%
• JPY, -0.62%
• GBP, +0.26%
• CAD +0.58%
• CHF +0.35%
• AUD +0.39%
• NZD +0.44%

In the US debt market, yields are lower on the day:

• 2 year 4.211%, -1.5 basis points
• 5 year 4.320%, -3.5 basis points
• 10 year 4.516%, -3.9 basis points
• 30 year 4.760%, -3.0 basis points

US stocks closed higher in up and down trading:

• Dow industrial rose 160.61 points or 0.38% at 44882.31
• S&P index rose 31.86 points or 0.53% at 6071.17.
• NASDAQ index rose 49.43 points or 0.25% and 19681.75
• Russell 2000 rose 24.3 point points or 1.07% and 2307.45

This article was written by Greg Michalowski at www.forexlive.com.