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Strong labour market in Japan:

Inflation data out at the same time. All three rates are well above the Bank of Japan 2% target and argue for further tightening on the meetings ahead. Currently the prospect of a a May rate hike is firming in the betting.

This article was written by Eamonn Sheridan at www.forexlive.com.

Inflation holding well above the Bank of Japan 2% target rate, which will keep speculation of a near term BoJ rate hike on simmer:

You’ll note, there were jobs data out at the same time. Showing, yet again, a strong result.

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Tokyo area inflation data.

• National-level CPI data for this month will follow in about three weeks, it takes longer to gather and collate the national data.
• Tokyo CPI is a sub-index of the national CPI
• It measures the change in prices of goods and services in the Tokyo metropolitan area
• Its considered a leading indicator of national CPI trends because Tokyo is the largest city in Japan and is a major economic hub
• Historically, Tokyo CPI data has been just slightly higher than national Japan CPI data. The cost of living in Tokyo is a touch higher than in most other parts of Japan. Higher rents, for example

There is some conjecture of a May Bank of Japan rate hike in the works:

• BoJ Rate Hike May Move Closer: Analysis & Outlook

This article was written by Eamonn Sheridan at www.forexlive.com.

It was a wild last few minutes of the New York FX session with conflicting headlines on tariffs:

I posted a bit of a recap summary here:

• USD/CAD spiked near a 5-year high as Trump said Canada and Mexico tariffs coming Saturday

Reuters contacted Adam for his take:

• “Confusion reigned for a few minutes on the headlines,” said Adam Button, chief currency analyst at ForexLive, adding that there was an initial impression among traders that Trump was in the process of signing executive orders on the tariffs which led to a brief bout of market panic.
• “Later, as it became clear as he was once again threatening tariffs, much of the move faded but not all of it. The market reaction shows how on edge everyone is around tariffs,” Button said.

Trump later dropped in China tariff comments, and the swings continued:

• Trump says China is going to end up paying a tariff as well

I’ve posted a CAD update, here’s AUD, caught in the crossfire:

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump sent FX (and other) markets into a spin late on Thursday afternoon New York time with his remarks on tariffs:

• Trump says China is going to end up paying a tariff as well

• Trump says China is going to end up paying a tariff as well

Trump announced that his 25% tariffs on Canada and Mexico will take effect on Saturday, though he has yet to decide whether to include oil imports from those countries in the policy.

“We may or may not,” Trump told reporters in the Oval Office on Thursday when asked about imposing tariffs on Canadian and Mexican oil. “We’re going to make that determination probably tonight.”

He stated that his decision would depend on whether the two countries are offering oil at a fair price, despite the tariffs being primarily aimed at curbing illegal immigration and the smuggling of chemicals used in fentanyl production.

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The USD surged higher, USD/CAD was particularly notable, jumping nearly to a 5-year high:

This article was written by Eamonn Sheridan at www.forexlive.com.

• 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.

Whirlpool is a good barometer of the global economy as consumer spending on things like washers/dryers and other appliances correlates with confidence, interest rates and housing turnover.

The later appears to be a particularly big problem for Whirlpool, which fell 16.5% today in the largest drop since 2020. Now much of that is just giving back the post-election rally but it’s still a worrisome move.

After the election they highlighted some strong sales and improved consumer confidence but looking ahead, they forecast weakness due to elevated mortgage rates and low existing home sales. They see no material improvement in 2025.

“Resilient replacement demand creates a solid foundation for industry volumes, while consumer discretionary demand continues to be negatively impacted by elevated mortgage rates, resulting in weak existing home sales,” said CEO Marc Bitzer.

For Latam it’s similar with an industry growth forecast of 0-3% while they forecast growth of 3-5% in Asia. There was no guidance on Europe.

This was also an interesting comment on pricing and the inflationary environment.

“The market right now is strongly driven by replacement demand and in that environment, it just does not make economic sense to go very deep on promotional investments.”

Combine these comments with the soft pending home sales report today makes for a tough housing environment in 2025.

This article was written by Adam Button at www.forexlive.com.

The first item lists, NZ consumer sentiment, has come in at 96.0 in January, a big drop from December.

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Most focus for the session is on Tokyo area CPI data.

Tokyo area inflation data is the focus for the session – this might give us a heads up what the Bank of Japan is thinking about a rate rise at the December 18-19 meeting.

• National-level CPI data for this month will follow in about three weeks, it takes longer to gather and collate the national data.
• Tokyo CPI is a sub-index of the national CPI
• It measures the change in prices of goods and services in the Tokyo metropolitan area
• Its considered a leading indicator of national CPI trends because Tokyo is the largest city in Japan and is a major economic hub
• Historically, Tokyo CPI data has been just slightly higher than national Japan CPI data. The cost of living in Tokyo is a touch higher than in most other parts of Japan. Higher rents, for example

There is some conjecture of a May Bank of Japan rate hike in the works:

• BoJ Rate Hike May Move Closer: Analysis & Outlook

Firming inflation data will add to this. Keep an eye on the data today as an input.

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.
• I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.

This article was written by Eamonn Sheridan at www.forexlive.com.

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

Tariff talking Trump

This article was written by Eamonn Sheridan at www.forexlive.com.

The major US stock indices snapped back from the late-day tariff news on Canada and Mexico and is closing higher on the day .

The final numbers are showing:

• 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

Looking at the S&P sectors, the gains are led by utilities and healthcare. On the downside, information technology was the only sector that saw a decline of -0.56%.

• Utilities (S5UTIL): +2.13%
• Health Care (S5HLTH): +1.15%
• Consumer Discretionary (S5COND): +0.61%
• Consumer Staples (S5CONS): +1.07%
• Materials (S5MATR): +1.00%
• Real Estate (S5REAS): +1.02%
• Energy (SPN): +0.52%
• Financials (SPF): +0.95%
• Telecommunication Services (S5TEL): +1.15%
• Industrials (S5INDU): +0.76%
• Information Technology (S5INFT): -0.56% (weakest)

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

The initial reports made it sound like he was signing the order at that moment. That’s not the case as he was signing some different orders (hence the confusion).

Importantly, he also said oil would be excluded, according to CNBC. However a Reuters report said he would decide tonight whether to impose the tariffs on oil.

It’s not clear if there were video cameras in the Oval office, so hopefully we get clarity soon on exactly what was said.

However the initial spike in the market have faded as everyone knows that it’s not a done deal until it’s done (and even after it’s done, the negotiations continue).

This article was written by Adam Button at www.forexlive.com.

Pres. Trump says that he will put a 25% tariff on Canada and Mexico citing fentanyl..

Trump assesses second presidential memorandum directing FAA to assess damage from DEI policies and ensure competence in hiring.

The USDCAD has run higher on the news with the price spiking to a high of 1.4594. That took the price above the high price from last Tuesday at 1.4514. The prices currently trading at 1.4535 in volatile trading. Staying above the 1.4514 is a bullish clue.

The price is also extended outside of the “red box”, that has defined most of the trading range going back to December 17. The high of that red box comes in at 1.4466.

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