Currency news / January 7, 2025

Fake news!

3 min read Thanim Islam

Thanim IslamJanuary 7, 2025

Market snapshot:

USD continues to retreat despite Trump's rebuttal
EU inflation to remain sticky

Yesterday's currency recap

Trading on USD was volatile yesterday. This came a week after the Washington Post reported that Trump's tariffs would be limited to specific critical imports, which led markets to consider this a more diluted version of his initial plans. As a result, USD broadly weakened, causing GBPUSD and EURUSD to climb back and erase the losses suffered since the turn of the year.

GBP also benefitted on the improved risk sentiment in the market. But later in the afternoon, after Trump refuted the claims made by the Washington Post, stating his tariff policy will not be pared back, those USD losses were trimmed.

German CPI numbers came in higher than expected which gave the EUR some interim support ahead of today's EU CPI numbers.

And over in Canada, PM Justin Trudeau announced he will be resigning from his post after nine years of power.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.32%	2.0047
GBPCAD	0.20%	1.7984
GBPCHF	0.38%	1.1329
GBPDKK	0.04%	8.9875
GBPEUR	0.04%	1.2049
GBPJPY	1.00%	197.3670
GBPNOK	0.05%	14.1262
GBPNZD	0.30%	2.2197
GBPSEK	0.20%	13.8334
GBPUSD	0.81%	1.2523

*Daily move - against G10rates at 7:30am, 07.01.25
** Indicative rates - interbank rates at 7:30am, 07.01.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	CPI MoM	Dec	0.40%	-0.30%
EUR	CPI YoY	Dec	2.40%	2.20%
EUR	Core CPI YoY	Dec	2.70%	2.70%
USD	JOLTS Job Openings	Nov	7,745,000	7,744,000
USD	ISM Services	Dec	53.5	52.1

What we think

EU CPI numbers will be the focus this morning - a higher-than-expected number should further support the EUR and allow the currency to continue to correct versus USD after its recent drop to a 2-year low. However, any correction on EURUSD will likely be short term as markets continue to fear the prospect of tariffs on the eurozone.

US Data will be the focus of the afternoon with the JOLTS numbers and ISM services and so long as the data continues to support the US growth exceptionalism narrative then we continue to favour USD to benefit over the medium term. As a result, we foresee any USD weakness will be short lived, and clients should use this opportunity to look at covering any future USD needs they might have.

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