North American Summary and Highlights 21 Jan
Overview - Risk appetite related to Greenland bounced as Trump first stated he would not use force to acquire it and later backed off tariffs due on February 1. The USD picked up as risk appetite firmed.
North American session
Focus was on Trump’s speech in Davos, ahead of which the USD slipped, with EUR/USD rising to a high of 1.1743 from near 1.17. The speech saw Trump state he would not use force to acquire Greenland, which despite a generally negative tone towards Europe lifted risk appetite and saw the USD reversing earlier losses. Late in the session Trump announced he would not be imposing tariffs on European nations that had been threatened for February 1, having done a deal with NATO Secretary General Rutte, though details remain unclear. This lifted equities and bonds further while EUR/USD slipped to 1.1680 and USD/JPY bounced to 158.50 from near 158. EUR/GBP erased European gains but EUR/CHF advanced to .93 after earlier slipping to .9260. USD/CAD reversed earlier losses to end little changed though AUD/USD managed modest gains despite coming off its highs.
Focus was not on data but December US pending home sales plunged by 9.3% to erase four straight gains. This contrasted strong MBA indices for the week to January 16 released earlier. In a delayed double release, October US construction spending rose by 0.6% after a 0.5% decline in September. Trump also suggested he had decided on his choice for Fed Chair.
European morning session
The UK released CPI data for December, which rose by 0.4% on the month with yr/yr growth at 3.4% from 3.2% on the firm side of consensus, but with the core rate unchanged at 3.2%, a little softer than expected. GBP/USD slipped from 1.3430 to test 1.34, which held. EUR/GBP ruse to .8740 from .8410.