German producer prices saw an average annual decline of 1.2% in 2025, once again exhibiting a decline for a second year running. However, there is a caveat to that figure with it being a case largely owing to a steep decline in energy prices.Of note, energy prices showed a drop of 6.2% compared to the previous year. The breakdown shows that natural gas distribution was 8.3% cheaper on average in 2025 than in 2024, electricity 7.5% cheaper, and petroleum products 5.5% cheaper.If you strip out energy price developments, German producer prices were actually up by 1.2% instead in 2025 compared to the previous year.The more detailed breakdown elsewhere shows intermediate goods were on average 0.3% cheaper in 2025 than in 2024. Meanwhile, the prices for capital goods were on average 1.9% higher, with consumer goods on average 2.7% more expensive in 2025 compared to the year before.The story here is somewhat similar to what we've seen with Germany's consumer price index progression. That being headline annual inflation reflecting a decline that is seen nudging closer to the pivotal 2% mark. However, core annual inflation is still keeping more stubborn and holding above the 2% threshold.The latter continues to be a thorn in the side of the ECB, preventing the central bank from following through on easing monetary policy further since the closing stages of last year. This article was written by Justin Low at investinglive.com.

Prior 5.1%Employment change 82k vs 30k expectedPrior -16kAverage weekly earnings +4.7% vs +4.6% 3m/y expectedPrior +4.7%; revised to +4.8%Average weekly earnings ex bonus +4.5% vs +4.5% 3m/y expectedPrior +4.6%December payrolls change -43kPrior -38k; revised to -33kAs a general reminder, the UK labour market report is still one plagued by data quality issues. And that looks set to continue further as outlined here last week: UK statistics office evaluates potential delay to its overhauled jobs survey - reportThe jobless rate holds steady at just above 5% in November but payrolls in December continues to fall further. And the latter underscores the continued softening in UK labour market conditions alongside the slow climb in the unemployment rate last year.Wages data continue to hold up somewhat, only reflecting a marginal drop from October. And with consumer prices still holding more stubborn, it's keeping the BOE on edge in trying to decide what to do next on the policy front. This article was written by Justin Low at investinglive.com.

There is arguably just one to take note of on the day, as highlighted in bold below.That being for EUR/USD at the 1.1650 level. It's not one that ties to any technical significance, so the impact of the expiries may be more limited. The dollar remains weak overall amid the whole Greenland situation, with traders punishing the greenback on more chaotic and erratic policy by the US administration.The 200-hour moving average sits at 1.1644 with the 100-day moving average at 1.1661. Those will be the more critical levels to be mindful of just in case we do see some pushing and pulling in price action in European morning trade.The expiries will just add a bit of layering to the key technical levels above but it's all about traders defending the lines there that will matter more. In my view, the push back above the key hourly moving averages is a big step this week.Buyers are back in near-term control for the first time since the end of last year. As such, defending that 200-hour moving average line is a vital action in keeping a more bullish near-term bias. There was a bit of a struggle overnight and in early Asia trading to break above it but we're now taking that in stride as the dollar continues to struggle today.For more information on how to use this data, you may refer to this post here.Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

Up, up, and away! Gold bulls really couldn't wish for a better start to the new year. And it's all thanks to one man. The first week was filled with geopolitical tensions involving Venezuela. The next was an attack on Fed independence and added geopolitical risks with Iran. This week, it's a combo of geopolitical strife and economic risks as Trump floats tariffs to try and get his way with Greenland.All of this just continues to exacerbate the same key drivers that have led to the gold rally in the past year.A safety hedge? Check. A hedge against stagflation risks? Check. Erratic US policy leading to a de-dollarisation theme? Check. Currency debasement worries? Check. Strong January seasonal pattern? Check.The only qualm with the surge higher in prices we're seeing is that it might be going too far, too fast.But when you weigh everything against the backdrop above, it's hard not to like the things that gold has going for it.As the run higher continues, the $5,000 mark will be eyed fairly closely next. That will be a big, big level to watch on any profit-taking activity. That especially if it coincides with the January seasonal strength tailing off.This is the kind of rally that will stop when it stops. Just think of it as the catching the falling knife dispensation but in reverse.To the moon! ? This article was written by Justin Low at investinglive.com.

Putin has been invited to join 'Board of Peace'I will impose a 200% tariff on French wines and champagne; Macron will join 'Board of Peace'I know who I want to be the Fed chairFor some context, this whole 'Board of Peace' thing is something that Trump is trying to create as part of a taskforce to oversee the next steps in Gaza. The main concern from global leaders is that Trump is attempting to supplant the current working order in international politics to gain extensive powers beyond transitional governance of the Gaza Strip. This also serves to undermine the existing United Nations framework of course.I'm not sure if he spoke to Macron overnight but his comment above doesn't sound right. Macron has already said that he would reject Trump's invitation and it would be off-brand to expect him to do so. That especially since Europe and the US are not really seeing eye-to-eye on any political ground at the moment - not just this one. So, I'd take it with a pinch of salt as it looks like Trump is just trying to goad Macron and the EU there. Note the tariffs comment just before it.As for the Fed chair, it's still very much up in the air. The two Kevins are still the favourite with Hassett of course being more of a Trump loyalist. However, Waller's bid is starting to gain some traction so we'll have to see. Trump isn't giving anything away just yet. This article was written by Justin Low at investinglive.com.

Geopolitical tensions remain at the forefront as Trump raised the stakes on the whole Greenland situation over the weekend. In case you missed it, he threatened tariffs on eight European countries over their opposition to US control of Greenland. That being Denmark, Norway, Sweden, France, Germany, Netherlands, Finland, and the UK.The tariffs will come in two stages, the first being a 10% levy on all goods starting from 1 February. Thereafter, it will increase to 25% starting from 1 June unless "a deal is reached for the complete and total purchase of Greenland". Oh, what fun.The erratic policy nature of the US administration is rearing its ugly head again. And that's putting risk sentiment on the defensive. Meanwhile, precious metals are pushing higher while the dollar is struggling in the major currencies space. Go figure. It's pretty much a repeat of 2025 once equities brush aside the geopolitical risks in due time.All of this just continues to play into the structural narrative that has been building since Trump first threatened the world with tariffs in Q1 last year. So, yeah. That is the bigger picture story.For US stocks, it might not be as easy to fade the negative headlines this time around. For one, we've seen such a heated rally in the past year already with tech shares and AI stocks not letting up. But now, AI valuation concerns are creeping in and there are more things to factor in when looking purely into the "AI trade" as seen here.US futures are keeping lower still today awaiting the return of the long weekend in Wall Street. S&P 500 futures are still down 1.0% with Nasdaq futures down 1.1%. It's pointing to a rough start but we'll have to see if investors will feel comfortable enough to bounce back in the early stages this week.I would be more confident in saying there's better scope for European stocks to do so but at the same time, it's also a good time to pull back a little there after having hit fresh record highs last week.Three more years to go. Fun times, innit? This article was written by Justin Low at investinglive.com.

BOJ signals readiness for more rate hikes as yen weakness fuels inflation risksCiti downgrades European stocks on Greenland tariff tensionChina meets trade pledge with surge in US soybean purchases, but keeps Brazil option openChina moves to curb price wars (“involution” again), weighs national M&A fundMorgan Stanley: Trump tariff threat poses limited broad risk to Europe stocksJapan stocks slide as bond yields hit records and Greenland tensions biteChina keeps LPRs unchanged, signalling patience on broad easing - further detailPBOC sets USD/ CNY central rate at 7.0006 (vs. estimate at 6.9576)PBOC set 5- and 1-year LPR rates unchanged, 3.5% and 3.0% respectively. As expected.Citi flags risk of three BOJ hikes in 2026 if yen weakness persists. Watch USD/JPY 160PBOC is expected to set the USD/CNY reference rate at 6.9576 – Reuters estimateReport Trump admits ‘bad information’ on Greenland troop moves. Opens de-escalation door?Banks split on USD impact from Trump Greenland tariff threat, diverge on sell America riskJapan snap election puts BOJ–fiscal policy clash in focus, Goldman Sachs warnedVenezuela plans to boost gold and iron mining output to attract inbound FXExpandarama! New Zealand services PMI December 2025: 51.5 (prior 47.2)investingLive Americas FX market wrap: Vujcic picked as ECB Vice PresidentAt a glance:Markets were subdued as investors waited for US trading to fully resume after the holiday.New Zealand data surprised positively, with services PMI back in expansion, lifting NZD and supporting AUD.Japan’s bond sell-off deepened, with the 40-year JGB yield hitting 4% on fiscal and tax-cut concerns.China held LPRs steady, delivered its strongest yuan fix since May 2023, and stepped up US soybean buying.Geopolitics stayed in focus after Trump conceded possible misinformation on Greenland troop moves.10y US Treasury yield continued higher, back to a 4-month highIt was a session defined by limited data and a wait-and-see mood, with markets marking time ahead of a full reopening in the US after the holiday Monday.In New Zealand, the services sector returned to expansion in December, with the PSI rising to 51.5, ending a 21-month contraction. The improvement followed last week’s manufacturing PMI rebound, reinforcing signs of economic stabilisation. NZD/USD found support on the data and extended gains as the session progressed, while AUD/USD also pushed higher.The yen traded in a narrow range, but pressure continued to build in Japan’s bond market. Japan’s 40-year government bond yield hit 4%, the highest since the bond’s debut in 2007 and the first time in more than 30 years that any Japanese sovereign yield has reached that level. The move reflected an accelerating JGB sell-off amid growing fiscal concerns, particularly around proposals to cut the food sales tax. The Centrist Reform Alliance has suggested funding a zero food tax through a new government-linked fund, adding to investor unease around public finances.In China, the PBOC kept its one- and five-year loan prime rates unchanged for an eighth straight month, in line with expectations. The decision reinforces a preference for targeted easing tools, with broader rate cuts still seen later in Q1 or Q2. Shortly after, the USD/CNY reference rate was set at its strongest level for the yuan since May 18, 2023, prompting USD/CNH to fall in the minutes following the fix.Separately, traders reported that China has purchased around 12 million tonnes of US soybeans over the past three months, meeting a key trade pledge outlined by the Trump administration in November.On the geopolitical front, CNN reported that Donald Trump conceded in a call with UK Prime Minister Keir Starmer that he may have received “bad information” regarding European troop deployments to Greenland. UK officials cited in the report see scope for de-escalation, though broader US–Europe disagreements remain unresolved.Looking ahead, Trump is scheduled to deliver a special address at the World Economic Forum in Davos on January 21, 2026, from 13:30–14:15 GMT.Overall, major FX pairs traded in relatively subdued fashion, with markets largely in consolidation mode. Asia-Pac stocks:Japan (Nikkei 225) -1.14%Hong Kong (Hang Seng) -0.08% Shanghai Composite -0.12%Australia (S&P/ASX 200) -0.66%4th session of sliding for Japan's Nikkei: This article was written by Eamonn Sheridan at investinglive.com.

The BOJ looks set to keep rates steady for now while signalling a tightening bias as yen weakness and fiscal uncertainty lift inflation risks. Reuters preview summarised. Summary:BOJ expected to hold policy rate at 0.75%Growth outlook for fiscal 2026 likely revised higherYen weakness and wage gains keep inflation risks aliveSnap election complicates policy messagingApril rate hike seen as possible if yen slides furtherThe Bank of Japan is expected to keep its policy rate unchanged at 0.75% at the conclusion of its January meeting on Friday, while signalling readiness to lift borrowing costs further as a weaker yen and resilient wage growth keep inflation risks elevated.Policymakers are widely expected to revise up their growth outlook for fiscal 2026, according to sources, reflecting support from government stimulus and a waning drag from US tariffs. However, the BOJ is unlikely to alter its projected timeframe for sustainably achieving its 2% inflation target, which it currently sees materialising around October or in the latter half of the fiscal year starting in April.Markets will focus closely on Governor Kazuo Ueda’s post-meeting briefing for guidance on how the central bank balances the need to arrest further yen depreciation without fuelling additional rises in government bond yields. The task has been complicated by Prime Minister Sanae Takaichi’s decision to call a snap election for February and her pledge to loosen fiscal policy through tax cuts and higher spending.Since Takaichi took office in October, the yen has weakened roughly 8% against the dollar, briefly touching an 18-month low near 159.5 last week, while concerns over Japan’s fiscal outlook have driven the 10-year government bond yield to multi-decade highs. Although the currency has since stabilised, its downtrend continues to push up import costs and consumer prices.Some analysts argue that expansionary fiscal policy could add to inflationary pressure and strengthen the case for further tightening. Others caution that a strong election mandate may embolden reflation-minded advisers who favour keeping rates low to support growth.Sources told Reuters that some BOJ policymakers see scope for an earlier move, with April not ruled out if yen weakness persists. While most economists still expect the next hike around July, markets increasingly see foreign-exchange dynamics as a critical trigger for the BOJ’s next step. This article was written by Eamonn Sheridan at investinglive.com.

Citi cuts Europe to neutral as Greenland-linked tariff risks cloud the outlook, while Japan emerges as the regional preference.Summary:Citi downgrades European equities to neutralDecision driven by US–EU tension over GreenlandTariff uncertainty weighs on earnings outlookEU considers retaliation on $108bn of US goodsJapanese stocks upgraded to overweightCitigroup has downgraded European equities to neutral for the first time in more than a year, citing rising transatlantic tensions and renewed tariff uncertainty linked to President Donald Trump’s push over Greenland. Strategists said the shift reflects a weakening near-term investment backdrop and greater downside risks to earnings as trade frictions resurface.In a note to clients, Citi said the latest escalation has undermined confidence just as European shares had been benefiting from valuation support and improving growth expectations. The downgrade comes after Trump threatened tariffs tied to Greenland, reviving concerns that political brinkmanship could spill into broader trade measures. European equities, which had outperformed US stocks over recent months, fell following the announcement.Citi contrasted Europe’s deteriorating risk profile with a more constructive outlook elsewhere, upgrading Japanese equities to overweight. The bank pointed to clearer policy signals, improving corporate governance trends and a more supportive earnings outlook in Japan, even as Europe grapples with uncertainty over trade, geopolitics and policy coordination.The tariff threat has also prompted a swift response from Brussels. The European Union is weighing retaliatory measures on up to $108bn of US goods, according to people familiar with the discussions. While officials have stressed that no decisions are final, the move highlights how quickly the dispute could escalate into a wider trade confrontation.Citi warned that even without an immediate implementation of tariffs, the uncertainty itself is enough to weigh on corporate investment, cross-border supply chains and equity multiples. Export-heavy sectors and companies with meaningful US exposure are seen as most vulnerable if tensions intensify.Overall, the bank said the downgrade reflects a more balanced risk-reward for Europe at current levels, rather than an outright bearish call. However, until there is greater clarity on US–EU relations and the Greenland issue, Citi believes Europe’s near-term upside is capped relative to other regions. This article was written by Eamonn Sheridan at investinglive.com.

China’s rapid US soybean buying meets a near-term trade goal, but future demand hinges on price, politics and Brazilian supply. Summary:China bought about 12m tonnes of US soybeans in three monthsPurchases met a key trade pledge made in NovemberBuying largely by state firms for strategic reservesTariff cuts and eased restrictions enabled importsFocus shifts to whether buying continues toward 2028 targetChina has sharply increased purchases of US soybeans over the past three months, buying an estimated 12 million tonnes and fulfilling a key trade commitment made to the Donald Trump administration in November, according to traders familiar with the flows.The buying marks a notable shift after months of relative avoidance, with most of the volumes reportedly sourced by state-owned firms and directed into strategic reserves rather than immediate commercial consumption. Traders say the surge was enabled by Beijing’s decision to reduce tariffs and lift import restrictions, clearing the way for US cargoes to move again after a prolonged lull.The purchases appear designed to meet near-term political and strategic objectives, while giving Beijing flexibility over future sourcing. China has committed to buying 25 million tonnes of US soybeans annually through 2028, and the recent surge means it has already completed nearly half of that implied yearly target in a short window.Attention is now turning to whether China maintains the pace. Traders note that Chinese buyers have already begun booking new-crop soybeans from Brazil, a reminder that South America remains a critical alternative supplier and a key lever in China’s broader procurement strategy. Seasonal availability, pricing differentials and freight costs will likely shape the balance between US and Brazilian supply in coming months.For the US, the renewed demand offers support to soybean prices and export volumes after a volatile period marked by trade tensions and shifting policy signals. For China, the purchases help bolster food security and strategic reserves while keeping diplomatic commitments intact without fully locking in future buying behaviour.The episode highlights Beijing’s continued preference for diversification and timing flexibility in agricultural imports. While the 12 million tonnes bought so far satisfy an immediate pledge, the larger test will be whether China sustains US purchases at scale alongside Brazilian imports as it works toward the multi-year target through 2028. This article was written by Eamonn Sheridan at investinglive.com.

Beijing is signalling tougher oversight of price wars and fresh support for consolidation as it reshapes industrial competition. Summary:NDRC vows crackdown on “disorderly” low-price competitionFocus on curbing industrial “involution” and price warsAuthorities want competition based on quality and brandingChina studying a national-level M&A fundAim is to accelerate innovation and industrial upgradingAdded ... kept tge best til last they did ...China will implement a more proactive fiscal policy and a moderately loose monetary policy, prioritising price recovery as a core objective.China is moving to rein in aggressive price competition while exploring new tools to accelerate industrial upgrading, signalling a more forceful policy push to address what officials describe as industrial “involution.”Speaking at a State Council briefing on Tuesday, National Development and Reform Commission (NDRC) vice chairman Wang Changlin said authorities will step up efforts to curb what he called “disorderly” low-price competition in key sectors. The NDRC plans to tighten price supervision and refine local government investment-attraction practices in a bid to restore healthier market order.Wang said excessive price cutting has undermined profitability, distorted competition and weighed on long-term innovation, particularly in manufacturing-heavy industries. The policy response aims to shift competition away from price wars and toward quality, branding and value-added production, a message that aligns with Beijing’s broader push to stabilise corporate margins and ease deflationary pressures.Alongside the crackdown on destructive pricing, the NDRC is also studying the creation of a national-level merger and acquisition fund. Wang said such a fund could help accelerate the development of so-called “new quality productive forces” by supporting consolidation, innovation and strategic investment across priority industries.The proposed fund would leverage national venture capital as a benchmark and improve coordination between government investment vehicles and existing fund structures. Officials see this as a way to guide capital toward sectors deemed strategically important, while reducing fragmentation and inefficient competition.Taken together, the twin initiatives highlight a shift in policy emphasis. Rather than relying solely on stimulus to boost demand, Beijing is increasingly focused on supply-side discipline, corporate restructuring and industrial upgrading. That approach also reflects concerns that persistent price wars have contributed to deflationary dynamics and eroded returns across parts of the private sector.For markets, the messaging points to greater regulatory oversight of pricing behaviour, potential consolidation winners in sectors targeted by M&A support, and a renewed policy effort to stabilise industrial profitability as China navigates slower growth and intense global competition. This article was written by Eamonn Sheridan at investinglive.com.

Morgan Stanley argues Trump’s Greenland tariff threat is a stock-specific risk, not a systemic shock for European equities. Summary:Morgan Stanley sees tariff impact as concentrated, not broadOnly 2.2% of MSCI Europe revenues directly exposedTrump threatens tariffs over Greenland disputeEU weighs retaliation and legal optionsDefence stocks remain a key beneficiaryEuropean equities’ exposure to President Donald Trump’s latest tariff threat is highly concentrated rather than market-wide, according to analysts at Morgan Stanley, limiting the risk of broad-based damage to regional stocks.In a note to clients, the bank estimates that just 2.2% of revenues across the MSCI Europe index are directly exposed to the proposed tariffs. Put differently, around 10% of the index’s weight consists of companies where more than 10% of revenues would be affected by new levies, highlighting what Morgan Stanley describes as an “idiosyncratic” shock rather than a systemic one.Trump last week threatened to impose 10% tariffs on eight European countries—Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the UK—unless the United States is allowed to acquire Greenland. He warned the levies could rise to 25% if the purchase does not proceed, framing the move as a national security imperative. European officials have strongly rejected that rationale, characterising the threat as coercive.The escalation has pushed EU leaders toward contingency planning ahead of an emergency summit in Brussels. Options under discussion reportedly include retaliatory tariffs on up to €93bn of US imports, as well as deploying the bloc’s Anti-Coercion Instrument, which could restrict US access to EU investment, banking and services markets. According to Reuters, the tariff response currently has broader political backing.Morgan Stanley also highlights legal uncertainty around Trump’s trade tools. Nearly half of Europe’s Greenland-related exposure falls under tariffs imposed using the International Emergency Economic Powers Act (IEEPA)—legislation now under review by the US Supreme Court. A ruling against the administration, expected imminently, could complicate efforts to reimpose or expand tariffs tied to Greenland.Against this backdrop, the bank reiterated an overweight stance on European defence stocks, arguing the episode reinforces Europe’s resolve to boost strategic autonomy and defence spending. More broadly, Morgan Stanley sees limited tactical downside for European equities and expects diversification flows to continue. This article was written by Eamonn Sheridan at investinglive.com.

Rising bond yields and fresh trade tensions are cited as dragging Japanese equities lower as investors brace for election-driven volatility.Summary:Nikkei fell for a fourth straight sessionBond yields jumped to record highs on fiscal concernsSnap election call unsettled marketsTrump tariff threats hit global sentimentElection outcome seen as key catalystJapanese equities extended their pullback on Tuesday, with stocks falling for a fourth consecutive session as a sharp rise in domestic bond yields and renewed geopolitical tensions added to investor unease.The Nikkei 225 slipped in early trade, putting the index on course for its longest losing streak in roughly two months. The broader Topix also weakened, reflecting broad-based selling across sectors.Pressure on equities intensified after Japanese government bond yields surged to record highs, following Prime Minister Sanae Takaichi’s formal call for a snap general election on February 8. As part of her campaign platform, Takaichi pledged to suspend the sales tax on food, a move that heightened investor concerns about fiscal discipline and future government borrowing needs. Those concerns quickly fed through to the bond market, lifting yields and undermining equity valuations.External risks compounded the negative tone. With US markets closed for a public holiday, sentiment in Asia tracked losses in Europe overnight after Donald Trump threatened to impose additional tariffs on several European countries unless Washington is allowed to purchase Greenland. The prospect of escalating trade frictions between the US and Europe weighed heavily on global risk appetite and spilled over into Japanese stocks.Reuters cited market strategists warning that rising yields are becoming a key headwind for equities. Nomura Securities strategist Maki Sawada said higher interest rates are likely acting as a drag on stock prices, while tariff threats that hit European markets appear to be spreading into Asia.Looking ahead, Nomura outlined a wide range of election-driven outcomes. A decisive victory for Takaichi’s ruling Liberal Democratic Party could spark a relief rally, while a loss of power would likely trigger a sharp sell-off. A narrow win, meanwhile, may leave equities largely range-bound as investors wait for clearer policy direction. This article was written by Eamonn Sheridan at investinglive.com.

China’s steady LPR decision underscores a cautious, targeted easing approach as policymakers weigh domestic weakness against financial stability.Summary:China left LPRs unchanged for an eighth monthOne-year LPR at 3.00%, five-year at 3.50%Move aligns fully with market expectationsPolicy focus remains on targeted easing toolsBroader rate cuts seen later in Q1–Q2China kept its benchmark lending rates unchanged for an eighth straight month in January, reinforcing signals that policymakers are prioritising targeted support over broad-based monetary easing for now.The People's Bank of China left the one-year Loan Prime Rate (LPR) at 3.00% and the five-year LPR, which is closely linked to mortgage pricing, at 3.50%. The decision was fully in line with market expectations, with all respondents in a Reuters survey predicting no change to either rate.Holding the LPRs steady suggests Beijing is in no rush to deploy sweeping rate cuts, even as growth headwinds persist. Instead, authorities appear focused on sector-specific tools, following last week’s reductions to a range of structural policy rates. While those targeted measures can lower financing costs for selected parts of the economy, they typically deliver a more muted boost to overall growth than benchmark rate cuts.The central bank has nonetheless signalled it retains room to ease policy further in 2026, including through cuts to banks’ reserve requirement ratios (RRR) and potentially broader interest-rate reductions later in the year. Economists broadly expect any move on benchmark rates to come in the first or second quarter, once policymakers have clearer visibility on domestic demand and external risks.China’s economy expanded 5.0% last year, meeting the government’s official target. Growth was underpinned by strong exports, as manufacturers captured a record share of global goods demand to offset weak household consumption at home. While that strategy has helped cushion the impact of US tariffs, analysts warn it is becoming harder to sustain without a stronger domestic recovery.Looking ahead, analysts differ on the policy mix. Bank of America Securities argues that recent sector-specific rate cuts reduce the urgency for near-term, broad-based easing, though it still expects more comprehensive monetary and fiscal support by late Q1 or early Q2. Nomura, meanwhile, sees fiscal policy doing more of the heavy lifting near term and forecasts a modest 10bp rate cut and a 50bp RRR reduction in Q2, alongside possible targeted housing support.-By holding benchmark rates steady, Beijing is signalling patience, keeping pressure on fiscal policy and targeted credit tools to support growth while leaving scope for broader easing later in 2026. This article was written by Eamonn Sheridan at investinglive.com.

The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a "band," around a central reference rate, or "midpoint." It's currently at +/- 2%.Previous close was 6.9640 PBOC injects 324bn yuan, 7-day reverse repos, unchanged rate 1.4%.Earlier:PBOC set 5- and 1-year LPR rates unchanged, 3.5% and 3.0% respectively. As expected. This article was written by Eamonn Sheridan at investinglive.com.

PBOC set 5-year Loan Prime Rate (LPR) at 3.5%3.5% expected, 3.5% prior1-year LPR 3.0% 3.0% expected, 3.0 prior The eighth consecutive month without a change.More info here. Coming up soon:PBOC is expected to set the USD/CNY reference rate at 6.9576 – Reuters estimate This article was written by Eamonn Sheridan at investinglive.com.

Citi flags risk of three BOJ hikes if yen stays weak.Citi puts USD/JPY at the centre of the BOJ reaction function, with 160+ the level that could drag rate hikes forward.Summary:Citi’s Hoshino sees risk of three BOJ hikes if yen stays weak USD/JPY > 160 could bring an April move to 1% Another hike in July, with a possible third by year-end Rationale: negative real rates are pressuring the yen Faster BOJ path contrasts with more gradual consensus timingCitigroup’s head of markets for Japan, Akira Hoshino, says the Bank of Japan could end up hiking rates three times in 2026 — effectively doubling the current policy level — if yen weakness persists, highlighting how the exchange rate is becoming a more central input into Japan’s policy debate. In a Bloomberg (gated) interview, Hoshino argued the yen’s slide is fundamentally rooted in negative real interest rates, where yields remain below inflation, and that the BOJ may have little choice but to respond if it wants to change the currency’s direction. He outlined a scenario in which USD/JPY moving above ¥160 would raise the odds of an April hike, taking the overnight call rate up by 25bp to 1%, followed by another 25bp increase in July, and potentially a third move by year-end should the yen remain low. That path is more hawkish than the consensus view, which generally expects the next BOJ move to be months away and often centers on mid-year timing rather than an April trigger. Reuters reporting has also flagged that some policymakers see scope to move sooner if the weak yen threatens to broaden inflation pressures, putting April “in play” even if the BOJ is widely expected to hold steady at its next meeting. Hoshino also pointed to a potential flow channel: if Japanese yields (notably in the 10-year sector) rise to a point where they exceed inflation, domestic institutions may consider reallocating money from overseas back into Japanese fixed income. In his view, a lack of attractive onshore yield options has been one reason the weak yen has proven persistent. Bottom line: Citi’s scenario frames USD/JPY levels — especially 160+ — as a practical catalyst for faster BOJ normalisation, even if the baseline remains gradual. This article was written by Eamonn Sheridan at investinglive.com.

Coming up from China today is the monthly Loan Prime Rate (LPR) setting. Which used to be a subject of mareket focus, but not so much any more. Preview and why here:Economic and event calendar in Asia Tuesday, January 20, 2026: China interest rate setting--The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

There is a report that Trump concedes ‘bad information’ on Greenland troop moves, opening path to de-escalation.Trump’s concession on Greenland troop deployments hints at de-escalation, but the strategic standoff with Europe remains unresolved.Summary:Trump privately conceded he may have had “bad information” on Greenland troop movesEuropean deployments were pre-briefed and coordinated with US structuresUK officials see scope for de-escalationCore US–Europe disagreement over Greenland remains unresolvedNew tensions emerge after Trump message to Norway’s PMPresident Donald Trump has privately acknowledged that he may have been given “bad information” regarding recent European troop deployments to Greenland, a concession UK officials see as a potential opening to dial down rapidly escalating transatlantic tensions.According to a senior UK official cited by CNN, Trump made the admission during a weekend phone call with British Prime Minister Keir Starmer. The remarks relate to announcements last week by several European NATO countries that they would deploy small contingents of military personnel to Greenland to take part in joint exercises with Denmark, moves that drew a sharp reaction from the US president.Officials familiar with the matter say Danish diplomats had briefed Washington ahead of the public announcements. A Danish official told CNN the deployments were not only communicated in advance but were pre-coordinated within existing European and US military structures, underscoring that the exercises were routine rather than provocative.Despite that coordination, the announcements triggered fresh friction inside the NATO alliance, with European diplomats telling CNN they were taken aback by how quickly tensions escalated across the Atlantic. Against that backdrop, UK officials view Trump’s apparent concession as an important signal that miscommunication, rather than intent, may have driven part of the dispute.The broader disagreement over Greenland, however, remains unresolved. Following talks in Washington between Denmark’s foreign minister Lars Løkke Rasmussen, Greenland’s foreign minister Vivian Motzfeldt, and senior US officials including Secretary of State Marco Rubio and Vice President JD Vance, Rasmussen said the US and Europe still hold a “fundamental disagreement” over Greenland’s future.Privately, Danish and Greenland officials said Washington listened to their red lines but did not retreat from Trump’s stated objective of gaining control of the island. They did, however, welcome the creation of a high-level working group as a channel to keep dialogue open. Fresh uncertainty was added after Trump sent a text to Norwegian Prime Minister Jonas Gahr Støre, warning he no longer felt bound to “think purely of Peace” after missing out on a Nobel Prize—introducing a new and unpredictable flashpoint This article was written by Eamonn Sheridan at investinglive.com.

Diverging bank views on tariff risks and the US dollar. Dollar risks from Trump’s Greenland tariff threats hinge on escalation, with banks split between growth resilience and sentiment fragility.Summary:Banks split on how tariff threats affect the US dollarSocGen sees fears of foreign US asset selling as overstatedMUFG warns of renewed “sell America” sentimentBoth see risks as modest without major escalationFocus is on sentiment shifts, not crisis dynamicsTwo major banks are taking different angles on the same political risk: President Donald Trump’s threat to impose tariffs on parts of Europe if the US fails to secure an agreement to acquire Greenland. While both see risks as contained for now, they diverge on how sensitive the US dollar may be to shifting investor sentiment.At Societe Generale, strategist Kit Juckes argues fears of a large foreign exodus from US assets are overdone. In his view, while European public-sector investors could slow purchases or even sell US assets in response to political pressure, it would take a far more serious escalation before institutions are willing to compromise portfolio performance for political signalling. Juckes also stresses that the dollar is already cheaper than a year ago and that US growth prospects are materially stronger than they were immediately after the sweeping tariffs announced last April. From this perspective, the dollar retains a fundamental buffer even if rhetoric around tariffs intensifies.MUFG, however, is more cautious on sentiment. FX strategist Derek Halpenny warns that tariff threats tied to Greenland could revive a broader “sell America” narrative, encouraging investors to further reduce dollar exposure at the margin. While MUFG does not foresee a disorderly move, it argues that political unpredictability itself can weigh on the currency by nudging global investors to diversify away from the US, particularly if trade tensions with Europe deepen.Importantly, both banks converge on a key point: scale matters. Neither expects aggressive dollar selling unless tensions escalate into a sustained US–Europe trade confrontation. In that sense, the debate is less about direction and more about degree. Societe Generale focuses on relative growth and institutional inertia supporting the dollar, while MUFG emphasises the cumulative impact of policy uncertainty on positioning.For markets, the takeaway is a familiar one: absent a major escalation, dollar moves linked to the Greenland tariff saga are likely to be incremental rather than dramatic, with sentiment oscillating between growth support and political risk. This article was written by Eamonn Sheridan at investinglive.com.