Forex News
White House advisor Kevin Hassett said that he is not disappointed about being passed over for the Federal Reserve (Fed) Chairman position and that US President Donald Trump made "a great choice" nominating Kevin Warsh. He also claimed that legal issues with the Fed should be resolved quickly, in an interview for CNBC on Friday.
Key quotes
Not disappointed about being passed over for Fed chair.
Warsh can speak to what president wants from monetary policy.
A confident can have high growth with low inflation.
PPI inflation data is different than consumer inflation data.
Inflation is not far from its target, fed made mistake not cutting rates this week.
Legal issues with fed should be resolved quickly.
Trump white house wants Warsh confirmed quickly.
Market interest rates should go down because of lower deficits.
Trump government is being 'super fiscally responsible'.
Warsh can speak for himself on monetary policy.
There are a lot of good reasons to want a strong dollar.”
(This story was corrected on January 30 at 16:26 GMT to correct a mispelling of Kevin Hassett's surname in the headline.)
Rabobank analysts expects the ECB to maintain the deposit rate at 2.00% through 2026, with two rate hikes anticipated in March and June 2027. Analysts notes that while the Euro's appreciation may prompt verbal intervention, it believes the currency can rise further before necessitating any policy changes.
ECB policy outlook and Euro performance
"We expect the ECB to leave the deposit rate unchanged at 2.00%."
"The burden of proof for any cut or hike is very high. We see the ECB on hold through 2026."
"The euro’s gains may draw some verbal intervention, but we believe the currency can appreciate quite a bit further before it would warrant another cut."
"We still have two rate hikes pencilled in, in March 2027 and June 2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CAD rebounds as easing fears over Fed independence and stronger US inflation data lift the US Dollar.
- Markets take comfort from a more institutional Fed leadership outlook, despite lingering political pressure on the central bank.
- Canada’s GDP stalls in November, offering limited support for the Loonie.
The Canadian Dollar (CAD) weakens against the US Dollar (USD) on Friday, as the Greenback regains some ground after concerns over the Federal Reserve’s (Fed) independence eased somewhat following US President Donald Trump’s decision to nominate a former Fed Governor as the next Fed Chair.
At the time of writing, USD/CAD is trading around 1.3520, up 0.22% on the day, but the pair remains on track for a second consecutive weekly decline.
Concerns over the Fed’s independence were a key driver behind the US Dollar’s recent slide to a four-year low. However, investors have taken some comfort from the prospect of Kevin Warsh, who is widely viewed as a more institutional candidate and likely to preserve the central bank’s independence.
Given Trump’s repeated calls for lower interest rates, markets had feared that his choice for the next Fed Chair could tilt US monetary policy onto a more politically driven and dovish path. While Kevin Warsh has recently aligned himself with Trump’s calls for more aggressive rate cuts, he is traditionally known as an inflation hawk, leading investors to view him as less supportive of deep and rapid interest rate reductions.
That said, broader concerns over the Fed’s independence have not fully faded. Trump has continued to publicly criticise Fed Chair Jerome Powell for not cutting interest rates and has also attempted to remove Fed Governor Lisa Cook, a case that is now before the US Supreme Court. In addition, reports of a recent criminal investigation involving Powell have kept political risk around the central bank in focus.
The US Dollar also finds support from hotter-than-expected Producer Price Index (PPI) data. Headline PPI rose by 0.5% MoM in December, accelerating from 0.2% in November and beating market expectations. On an annual basis, producer prices increased by 3.0%, matching the previous reading and coming in above forecasts of 2.7%.
Core PPI surprised even more to the upside, rising 0.7% MoM in December, well above expectations of 0.2% and the prior 0.0% reading. On a yearly basis, core producer prices climbed to 3.3% from 3.0%, also exceeding market estimates of 2.9%.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 96.80, rebounding after hitting a four-year low near 95.56 earlier this week.
On the Canadian side, data showed that the economy stalled in November, with GDP flat on the month after contracting by 0.3% previously and missing expectations for a 0.1% increase, offering little support to the Loonie.
However, rising Oil prices help limit the downside for the Loonie, as Canada is a major crude exporter. WTI is hovering near $65.24 a barrel, its highest level since September 26.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
The UBS Weekly Blog by Paul Donovan discusses the rapid decline of the US Dollar this year. It highlights that while a weaker currency typically correlates with higher inflation, modern trading behaviors have diminished this narrative. The report emphasizes that the Dollar's decline may be less impactful on the US affordability crisis compared to tariffs, and any inflationary effects are likely to be gradual due to existing contracts.
Impact of Dollar weakness on inflation
"Traditionally, a weaker currency is associated with higher inflation. Modern trading behavior has weakened that narrative, however."
"The dollar’s decline is likely to be less relevant to the US affordability crisis than were tariffs."
"The result is that while dollar weakness might have some effect on US inflation (mainly via commodity prices), the impact is less severe than with tariffs."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The AUD/USD pair corrects after reaching a three-year high, amid profit-taking.
- Australian producer price data confirm stable inflation at the end of the year.
- The US Dollar regains some ground, supported by political and budget-related developments in the US.
AUD/USD trades around 0.7000 on Friday at the time of writing, down 0.60% on the day, after retreating from a three-year high reached earlier this week. The pair thus snaps a three-day winning streak, amid a technical correction and a modest recovery in support for the US Dollar (USD).
The Australian Dollar (AUD) remains under pressure following the release of Australia’s Producer Price Index (PPI), which rose 3.5% YoY in the fourth quarter of 2025, unchanged from the previous quarter. These figures point to stable upstream inflation, with no further acceleration, limiting immediate enthusiasm for the Australian currency. Nevertheless, the Australian Dollar retains underlying support after hotter-than-expected consumer inflation data released earlier this week strengthened expectations of near-term monetary tightening.
Markets now price in more than a 70% probability of a 25-basis-point rate hike by the Reserve Bank of Australia (RBA) at its next meeting, from a current cash rate of 3.6%. Rate expectations also point to levels near 3.85% by May and around 4.10% by September, which could eventually limit the extent of the AUD/USD pullback.
On the US side, the US Dollar (USD) manages to recover part of its recent losses. The announcement of Kevin Warsh’s appointment as head of the Federal Reserve (Fed), replacing Jerome Powell, has reassured investors about the central bank’s independence. In addition, reports suggesting that a budget agreement between Democrats and Republicans in Congress remains possible have revived hopes of avoiding another government shutdown, providing additional support to the Greenback.
In the background, the latest US producer price data show inflation remaining firm. The Producer Price Index rose 3% YoY in December, above market expectations, while the core component also accelerated to 3.3% YoY. This combination of factors contributes to a temporary rebalancing in favor of the US Dollar, weighing on AUD/USD in the short term despite still-supportive monetary policy prospects in Australia.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.41% | 0.37% | 0.82% | 0.25% | 0.39% | 0.09% | 0.38% | |
| EUR | -0.41% | -0.04% | 0.37% | -0.16% | -0.02% | -0.34% | -0.03% | |
| GBP | -0.37% | 0.04% | 0.45% | -0.11% | 0.03% | -0.28% | 0.01% | |
| JPY | -0.82% | -0.37% | -0.45% | -0.57% | -0.43% | -0.75% | -0.45% | |
| CAD | -0.25% | 0.16% | 0.11% | 0.57% | 0.13% | -0.18% | 0.12% | |
| AUD | -0.39% | 0.02% | -0.03% | 0.43% | -0.13% | -0.31% | -0.02% | |
| NZD | -0.09% | 0.34% | 0.28% | 0.75% | 0.18% | 0.31% | 0.29% | |
| CHF | -0.38% | 0.03% | -0.01% | 0.45% | -0.12% | 0.02% | -0.29% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
TD Securities' Ryan McKay highlights a shift in oil market fundamentals, suggesting a potential pull-back in prices. The report indicates that a loosening of near-term fundamentals could reduce crude oil prices by at least $2-3/bbl, while geopolitical risks may also impact market dynamics. The analysis notes that supply issues are easing, with increased export flows from key regions.
Oil market facing bearish pressures
"We expect that a loosening of near-term fundamentals could shave at least $2-3/bbl off the latest crude oil rally, and should see the aggressive backwardations ease. We note that a major supply-altering event in Iran would nullify this, but also highlight that additional downside is possible should the easing of geopolitical risk premium coincide with the weakening fundamentals."
"Supply side issues that supported the market are now easing. Export flows from the port of Novorossiysk should recover notably as the third mooring (SPM-3) at CPC terminal is back from maintenance."
"Near-term demand could also take a hit as it appears the Chinese inventory stockpiling impulse has paused in January, with inventories actually drawing throughout the month. Furthermore, peak refinery turnaround season is around the corner, which will reduce refiner demand, leaving additional barrels available to the market."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Brown Brothers Harriman (BBH) reports that the Dollar has recovered within its multi-month range. Analysts expect the Dollar to hold within this range due to the Fed's cautious approach to monetary policy. The report highlights structural bearishness for the Dollar amid concerns over US fiscal credibility and trade policies.
Dollar remains within multi-month range
"We expect USD to hold within the range that’s been in place since June 2025 because the Fed is in no rush to resume easing and the risk is the Fed cuts less than is currently priced in (50bps by year-end)."
"Structurally, we are bearish USD because of fading confidence in US trade and security policy, politicization of the Fed, and worsening US fiscal credibility."
"The risk is the structural drags on USD outweigh the neutral cyclical USD backdrop and pull USD lower and further away from rate differentials, like it did in Q2 last year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- GBP/JPY edges higher as softer Tokyo CPI weighs on the Yen.
- Cooling inflation and weaker retail data reinforce expectations that the BoJ can afford to stay patient.
- Attention turns to the BoE’s interest rate decision amid still-elevated UK inflation.
The British Pound (GBP) trades firmer against the Japanese Yen (JPY) on Friday, as softer-than-expected Tokyo Consumer Price Index (CPI) data weigh on the Yen and revive doubts over the pace of policy normalisation by the Bank of Japan (BoJ). At the time of writing, GBP/JPY is trading around 212.16, hovering near the upper end of this week’s trading range.
Data released by the Statistics Bureau of Japan showed that inflation slowed in January. The Tokyo CPI rose 1.5% YoY, down from 2.0% in December, while both the CPI excluding fresh food and energy and the CPI excluding fresh food decelerated to 2.0% YoY, missing market forecasts of 2.3% and slowing from 2.2% in the prior month.
Following the data, a report published by BHH noted that the BoJ can afford to remain patient before resuming its rate-hiking cycle. The note added that the swaps market has trimmed the probability of a March rate hike to around 13%, from about 20% earlier this week, and now implies just over a 60% chance of a rate increase in April. BHH said its base case remains for the BoJ to deliver its next rate hike at the April 28 meeting.
Traders also digested a mixed batch of Japanese labour and consumption data released earlier in the day. Japan’s Unemployment Rate held steady at 2.6% in December.
Large Retailer Sales rose 2.0% YoY, slowing sharply from 5.0% in the previous month, while Retail Sales fell 0.9% YoY, missing expectations for a 0.7% increase and easing from 1.0% in the prior month.
On a monthly basis, seasonally adjusted Retail Sales dropped 2.0%, reversing the 0.6% rise seen in November.
Looking ahead, focus turns to the Bank of England’s (BoE) interest rate decision scheduled for February 5. The central bank is widely expected to keep rates unchanged at 3.75% as UK inflation remains well above the 2% target. Data released earlier this month showed headline CPI rose to 3.4% YoY from 3.2%, while core inflation held steady at 3.2%.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
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