Trump is taking over – buckle up

Allan von Mehren Danske Bank A/S

Market movers ahead

The key event in the US in the coming week is the inauguration of Donald Trump as the next US president. We should soon see a plan for the first 100 days and more clarification on his exact policies.
Other key events in the US include CPI inflation, business surveys from Philadelphia and New York (Empire) and a string of Fed speeches, not least by Fed Chairman Janet Yellen.
At the ECB meeting on Thursday, we do not expect any big changes in rhetoric despite stronger data and higher inflation recently.
China’s GDP for Q4 is likely to show another quarter of 6.7% growth y/y – the same as in the previous three quarters.

Global macro and market themes

Economic surprise indices are very high. This does not normally last for long. It is a short-term risk for yields.
A strong clash between Trump and China is an increasing risk.
EUR/USD is moving in tandem with the US-German rate differential.
The oil rally is over for now.

Download the full report

Author

Allan von Mehren

Danske Bank A/S

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.