- US markets were closed for Martin Luther King Jr. Day, although US equity futures were bid with outperformance in the Russell while ES, NQ and YM saw mild gains. T-Note futures were also underpinned with morning weakness pared after reports that President Trump is to avoid day-one tariff policies, which ultimately was confirmed and largely dictated trade for the session.
- USD tumbled on the WSJ report regarding no day-one tariffs which resulted in a broad-based risk-on sentiment in the G10 and EM space and dragged the DXY briefly below 108.00.
- Looking ahead, highlights include New Zealand Electronic Card Retail Sales & RBNZ Offshore Holdings, Supply from Japan.
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LOOKING AHEAD
- Highlights include New Zealand Electronic Card Retail Sales & RBNZ Offshore Holdings, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US markets were closed for Martin Luther King Jr. Day, although US equity futures were bid with outperformance in the Russell while ES, NQ and YM saw mild gains. T-Note futures were also underpinned with morning weakness pared after reports that President Trump is to avoid day-one tariff policies, which ultimately was confirmed and largely dictated trade for the session.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Donald Trump was sworn in as the 47th US President, while President Trump said in the Inaugural Address that the golden age of America begins now and he will sign a series of executive orders today, as widely expected. Trump said he will direct his Cabinet to defeat record inflation and will launch astronauts to Mars, while he added that all illegal entry will be halted and he will reinstate 'Remain in Mexico' policy, as well as send troops to the southern border. Furthermore, Trump will declare a national energy emergency and reiterated his 'drill baby, drill' catchphrase, while he will begin an overhaul of the trade system, will tariff and tax foreign countries to enrich US citizens, and will establish an 'External Revenue Service'.
- US President Trump’s administration sent a new document to Republican lawmakers detailing immediate priorities and it was stated that Trump will announce the America First Trade Policy. President Trump will take bold action to secure the border and protect American communities, while he will unleash American energy by ending Biden’s policies of extremism and all agencies will take emergency measures to reduce the cost of living.
- US President Trump will sign a trade action today directing federal agencies to examine trade policy and recommend follow-up actions, with a focus on USMCA, Buy American policies, IP rules, and a new External Revenue Service, while there will be no tariffs today, according to CNB. This follows earlier reports that President Trump is set to lay out his vision for trade but will refrain from imposing tariffs at this stage, according to WSJ citing a memo. Furthermore, a Trump official also confirmed the WSJ report that Trump will stop short of imposing day-one tariffs.
FX
- USD tumbled on the WSJ report regarding no day-one tariffs which resulted in a broad-based risk-on sentiment in the G10 and EM space and dragged the DXY briefly below 108.00.
- EUR benefitted from the dollar's demise and the lack of an immediate tariff announcement, while there were recent hawkish-leaning comments from ECB's Schnabel and Holzmann.
- GBP strengthened in which GBP/USD reclaimed the 1.2300 handle as all G10 currencies took a swipe at the buck, while participants await UK jobs and wages data on Tuesday.
- JPY gained against the greenback with USD/JPY retreating beneath 156.00 albeit with the moves in the yen moderate compared to other major peers.
- BoC Q4 business survey outlook showed overall sentiment is subdued and firms expect growth in costs to continue to ease.
FIXED INCOME
- T-note futures initially began the holiday session in the red as they tracked European counterparts lower after hawkish commentary from ECB's Schnabel and Holzmann, but later jumped from the morning lows after reports in the WSJ that US President Trump is set to avoid day-one tariff announcements.
COMMODITIES
- Oil prices declined as asset classes were jolted following the WSJ article that Trump is set to lay out his vision for trade but will refrain from imposing tariffs at this stage with demand hampered after the Israel-Hamas ceasefire took effect and Trump vowed to declare a national energy emergency as soon as he took office.
- Kuwait Oil Co. said a discovery has been made of large commercial volumes of hydrocarbons in an offshore field and that the discovered offshore field has an estimated 800mln oil barrels, according to the state news agency.
- US President Trump will end leasing to massive wind farms and will announce the America First Trade Policy, according to Bloomberg.
- North Dakota oil output is estimated to be down about 125k-150k BPD due to extreme cold and related operational challenges.
- LME noted approval of a Hong Kong LME delivery point for aluminium alloy, copper, lead, nickel, primary aluminium, tin and zinc, while the listing will become active three months after the first warehouse company has been approved.
- China's Zijin Mining Group restarted gold production at its Buritica project in Colombia, according to Reuters citing a company source.
GEOPOLITICAL
MIDDLE EAST
- Israeli army conducted an assessment of the first phase of the agreement and confirmed that it went smoothly, according to Sky News Arabia citing Channel 13.
- Hamas said a second batch of hostages will be released on Saturday as planned.
- Yemeni Houthis said as of Sunday, they will limit attacks on commercial ships and Israel-linked vessels.
- US President Trump is expected to lift the freeze on the supply of one-ton bombs to Israel, according to Walla News.
RUSSIA-UKRAINE
- Ukrainian President Zelenskiy said US President Trump's peace through strength policy is an opportunity to achieve just peace and he looks forward to active and mutually beneficial cooperation with Trump.
- Russian President Putin told Russia's Security Council they are open for dialogue with the new US administration, according to a Kremlin readout.
- Falling Ukrainian drone triggered a new fire at an oil storage depot in southern Russia's Voronezh region, according to the regional governor.
ASIA-PAC
NOTABLE HEADLINES
- China’s Commerce Ministry said regarding the EU complaint to the WTO over China's patent royalties that China and EU maintain smooth communication over IP issues and China expresses regret over the complaint, while China will handle subsequent matters in accordance with WTO rules and resolutely safeguard its legitimate rights and interests.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves backs plans for looser limits on mortgage lending and favours proposals by the financial regulator for banks to take more risks to boost home ownership, according to FT.
- ECB's Vujcic said risks around inflation are balanced and fine with the current policy stance, while the data is broadly in line with their forecast and he is not expecting any significant take-off in growth. Furthermore, he said market pricing of rate cuts is reasonable and there is no big focus on FX movements.
DATA RECAP
- German Producer Prices MM (Dec) -0.1% vs. Exp. 0.2% (Prev. 0.5%)
- German Producer Prices YY (Dec) 0.8% vs. Exp. 1.1% (Prev. 0.1%)
