EUR/USD drops during the North American session, down by 0.75% amid a session characterized by overall US Dollar strength, sponsored by Trump’s mild-hawkish pick to lead the Federal Reserve and an inflation report that warrants steady rates by the Federal Reserve.
The United States (US) Federal Reserve (Fed) had a busy week. On Monday, the Fed asked local New York banks about their positions in USD/JPY, fueling speculation that the US may be preparing to work with Japan on the Japanes Yen's (JPY) weakness.
Unconfirmed reports suggest that China may inject RMB 200 billion into large insurers to bolster their capital buffers, alongside an additional RMB 300 billion into major banks. This move aims to support the banking sector amid downward pressure on net interest margins.
• Major indexes edged lower as investors digested Trump's nomination of Kevin Warsh to succeed Fed Chair Powell in May.
DBS Bank's Group Research discusses the upcoming Reserve Bank of India (RBI) monetary policy committee meeting scheduled for February 6, 2026.
Korea's industrial production growth rebounded in December, indicating robust export growth. President Lee has signaled a potential supplementary budget to support various sectors, which could pose upside risks to Korea's growth.
Silver (XAG/USD) sinks sharply by more than 30% on Friday as the precious metals segment is being punished by the financial markets, with the grey metal falling more than $38 at the time of writing. XAG/USD trades at $76.91, after reaching a daily high of $118.46.
Gold price (XAU/USD) extends its losses on Friday, plunges nearly 10% to sink below $4,900 after US President Donald Trump revealed his pick for Fed Chair, while a hot inflation reading in the US justified the Federal Reserve’s (Fed) decision on Wednesday to keep rates steady.
USD/JPY rebounds around 154.50 on Friday at the time of writing, up 0.90% on the day, supported by a renewed recovery in the US Dollar (USD) after several weeks of weakness. The move comes as markets reassess the monetary policy outlook in the United States (US) and Japan.
DBS Bank's Group Research expects Taiwan's central bank to maintain its policy rate at 2.00% throughout 2026. The report highlights that inflation is projected to remain below the central bank's comfort zone, with subdued price pressures reflecting stable economic conditions.
The Japanese Yen remains under pressure, with concerns raised by local business leaders about its excessive weakness impacting profitability and wage growth.
The Swiss Franc (CHF) weakens against the US Dollar (USD) on Friday, as traders reassess the Federal Reserve (Fed) outlook following fresh signals from US President Donald Trump on the future leadership of the central bank.
The Indonesian Rupiah faces challenges amid a deteriorating fiscal picture and rising state-level borrowing. While Bank Indonesia's commitment to FX stability may help slow depreciation, a sustained recovery requires stronger policy clarity.
NZD/USD trades around 0.6035 on Friday at the time of writing, down 0.70% on the day, snapping a winning streak that began in mid-January. The pair pulls back after touching a six-month high at 0.6094 in the previous day, amid profit-taking and a firm rebound in the US Dollar (USD).
ABN AMRO's report outlines expectations for January PMIs in China, with a consensus forecast indicating broad stabilization. Both manufacturing PMIs are expected to remain at or just above the neutral 50 mark, while the services PMI is anticipated to decrease but remain in expansion territory.
Gold (XAU/USD) comes under intense selling pressure on Friday, giving back all the gains registered earlier this week as extreme volatility triggers broad-based liquidation of leveraged positions. Meanwhile, traders also lock in profits at elevated price levels.
Federal Reserve (Fed) Governor Stephen Miran said that he is really excited to see the good work he believes Kevin Warsh will do as Fed Chair after being nominated by President Donald Trump. In an interview with CNBC on Friday, he added he believes Fed officials will receive him well.
DBS Bank's Group Research projects that the Bank of Korea (BOK) will keep its base rate unchanged at 2.50% throughout 2026. The report indicates that January inflation is expected to ease, reflecting subdued demand-side pressures and stable supply-side conditions.
Federal Reserve (Fed) Bank of Atlanta President Raphael Bostic said that inflation is too high and needs to come down, and that the Fed should be more patient for now, in an interview for CNBC.
The Indian Rupee remains under pressure as USD/INR approaches the 92.00 level. The upcoming FY2026/27 Budget announcement is crucial for assessing fiscal consolidation amidst rising capital outflows.
Federal Reserve (Fed) Board of Governors member Christopher Waller said he dissented in favor of a 25 bps interest rate cut this week because monetary policy is still restricting economic activity too much, in a statement released on Friday.
The Pound Sterling (GBP) retreats on Friday, remaining below 1.3800 against the US Dollar (USD) after the Trump administration announced that Kevin Warsh would lead the Federal Reserve (Fed). Additionally, a red-hot inflation report on the producer front boosted the Greenback’s appeal.
White House advisor Kevin Hassett said that he is not disappointed about being passed over for the Federal Reserve (Fed) Chairman position and that US President Donald Trump made "a great choice" nominating Kevin Warsh.
Rabobank analysts expects the ECB to maintain the deposit rate at 2.00% through 2026, with two rate hikes anticipated in March and June 2027.
The Canadian Dollar (CAD) weakens against the US Dollar (USD) on Friday, as the Greenback regains some ground after concerns over the Federal Reserve’s (Fed) independence eased somewhat following US President Donald Trump’s decision to nominate a former Fed Governor as the next Fed Chair.
The UBS Weekly Blog by Paul Donovan discusses the rapid decline of the US Dollar this year. It highlights that while a weaker currency typically correlates with higher inflation, modern trading behaviors have diminished this narrative.
AUD/USD trades around 0.7000 on Friday at the time of writing, down 0.60% on the day, after retreating from a three-year high reached earlier this week. The pair thus snaps a three-day winning streak, amid a technical correction and a modest recovery in support for the US Dollar (USD).
TD Securities' Ryan McKay highlights a shift in oil market fundamentals, suggesting a potential pull-back in prices. The report indicates that a loosening of near-term fundamentals could reduce crude oil prices by at least $2-3/bbl, while geopolitical risks may also impact market dynamics.
Brown Brothers Harriman (BBH) reports that the Dollar has recovered within its multi-month range. Analysts expect the Dollar to hold within this range due to the Fed's cautious approach to monetary policy.
The British Pound (GBP) trades firmer against the Japanese Yen (JPY) on Friday, as softer-than-expected Tokyo Consumer Price Index (CPI) data weigh on the Yen and revive doubts over the pace of policy normalisation by the Bank of Japan (BoJ). At the time of writing, GBP/JPY is trading around 212.16