- US inflation expected to have ticked higher in December
- USDJPY soars on rising odds of a “snap” election call.
- US dollar opens with small gains across the board
USDCAD open: 1.3883, overnight range 1.3868-1.3888, close 1.3880, WTI 60.33, Gold 4586.60
The Canadian dollar drifted sideways in a quiet session as markets waited on this morning’s US inflation data. Prices remain supported following the US takeover of Venezuelan oil assets and Trump’s increasingly casual rhetoric around deploying US military power to expand American territory.
WTI crude rose from 59.47 to 60.83 following Trump’s latest tariff threat. He announced plans to impose 25% tariffs on any country doing business with Iran, injecting fresh geopolitical risk into energy markets.
Trump announced 25% tariffs on all of Iran’s trading partners, a move that risks chilling China’s appetite for Iranian crude unless Beijing decides to shrug it off and invite yet another round of US-China trade hostilities. Trump would prefer I refer to him as “President,” though recent logic suggests that anything short of deferential silence now qualifies as justification for extreme enforcement responses.
The US dollar could attract fresh buying interest if today’s December inflation data surprises on the upside. Headline CPI is expected to rise 0.3% m/m, matching November’s pace, while Core CPI is seen edging up to 2.7% y/y from 2.6%. Even so, the data remains distorted by lingering statistical noise tied to the 40-day US government shutdown.
Asian equity markets finished firmly higher, led by Japan where the Topix surged 2.41% on speculation surrounding a possible snap election. Hong Kong’s Hang Seng advanced 0.90%, while Australia’s ASX 200 added 0.56%.
As of 7:20 am, European equity markets were trading in the red, led by a 0.53% decline in France’s CAC. S&P 500 futures have fallen 0.09%, the US Dollar Index is 98.97, and the US 10-year Treasury yield is 4.20%.
EURUSD traded in a 1.1654–1.1675 range, with price action subdued as market attention drifted away from the Trump administration’s assault on Fed independence. The intraday technical picture remains bearish below 1.1700, keeping downside pressure focused on a test of the 1.1600 support zone.
GBPUSD drifted in a 1.3462–1.3486 range, marking time as traders waited for US inflation data and a heavy slate of American economic releases later in the week. Caution also reflects positioning ahead of Thursday’s UK November GDP report.
USDJPY climbed in a 157.90–159.05 range, surging to session highs before easing back to 158.88 in New York as speculation intensified around a snap Japanese election. Reports suggest Prime Minister Sanae Takaichi is considering dissolving parliament on January 23 to pave the way for a February vote, a move traders believe could strengthen her hand in pushing expansionary fiscal policies. Japan’s Finance Minister warned about one-sided yen weakness but she was largely ignored.
AUDUSD traded in a 0.6698–0.6717 range, leaning lower after softer-than-expected domestic data. The Westpac Consumer Sentiment Index slipped to 92.9 in January from 94.5 previously, with all sub-components remaining below the neutral 100 threshold.
