- Trump backs away from Greenland invasion
- Risk sentiment improves ahead of US data.
- US dollar opens lower across the board.
USDCAD open: 1.3824, overnight range 1.3815-1.3845, close 1.3835, WTI 59.89, Gold 4829.06
The Canadian dollar remained firm overnight, but it consolidated its recent gains. Traders have shifted their focus from geopolitical risks back to US data and its implication for Fed monetary policy. Canadian economic numbers are an after-thought.
WTI oil prices fell inside a 59.49-60.81 band with prices weighed down by rising US crude inventories. API said that crude stocks increased by 3.04 million barrels last week.
The US dollar is weaker versus yesterday’s close, Treasury yields have slipped, and gold has pulled back modestly while holding comfortably above $4800.00. With the Davos spectacle fading into the rear-view mirror, markets are refocusing on a different race altogether: the jockeying around the next Fed Chair.
Greenland briefly returned to centre stage before exiting just as quickly. Trump initially floated the idea of “title and ownership” during his Davos appearance, only to reverse course hours later, ruling out military options and claiming a vague “framework of a deal.” No details were provided, and notably, Greenland itself does not appear to have been part of the conversation.
Equity markets took the de-escalation in stride. Asian indices rebounded as geopolitical noise diminished, with Australia’s ASX 200 up 0.75%, Japan’s Topix gaining 0.74%, and Hong Kong’s Hang Seng edging 0.1% higher.
As of 7:45 am, the German DAX was up 1.21%, the CAC-40 had added 1.10%, and the FTSE 100 has risen 0.45%. S&P 500 futures were ahead by 0.54%, the US Dollar Index sat at 98.68 and, the 10-year Treasury yield is 4.26%.
EURUSD traded in a 1.1670–1.1698 range and continues to struggle to regain traction following the Greenland and tariff-related turbulence. The decision to shelve tariffs on countries backing Greenland removed one headwind, but traders remain cautious ahead of high-profile US data releases, particularly given lingering doubts about data reliability.
GBPUSD caught a bid in a 1.3402–1.3458 range and firmed after Trump abandoned plans for a punitive 10% tariff slated for February 1. The UK’s alignment with other Greenland supporters initially drew attention, but focus has since shifted back to macro data and Fed expectations.
USDJPY rose in a 158.18–158.89 range as defensive yen positions were pared back following Trump’s retreat from military rhetoric. The easing in geopolitical anxiety encouraged risk rebalancing, even as Japanese export growth disappointed, rising 5.1% year-on-year versus expectations of 6.1%.
AUDUSD rallied in a 0.6754–0.6812 range as the rally extended to levels not seen since October 2024. The move was reinforced by a strong labour market report, with employment jumping by 65,200 in December and the jobless rate falling to 4.1% from 4.4%. The data has materially lifted expectations for an RBA rate hike as early as next month.
Today’s US data which includes, weekly jobless claims, and core PCE price index.
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