On January 6, Bank of Japan Governor Kazuo Ueda hinted on Monday that further interest rate hikes could be possible in the future if economic and price trends align with the central bank's expectations. Addressing a Japanese banking industry group, Ueda confirmed that the Japanese economy maintained a moderate recovery trajectory last year, successfully weathering the impact of U.S. tariff hikes on corporate profits. He stated that wages and prices are expected to rise moderately in tandem, adding that adjusting monetary policy is crucial for achieving sustainable economic growth. Ueda's remarks reinforced the long-term trend of rising yen interest rates, which serves as a fundamental support for its value. However, against a backdrop where global markets remain focused on U.S. policy and the Bank of Japan is proceeding with extreme caution, the yen is unlikely to immediately reverse its weak position. The current impact can be summarized as "long-term positives lay the foundation, while short-term caution suppresses performance." Investors should pay closer attention to the sustainability of policy normalization rather than the timing of any single rate hike.
Furthermore, the latest World Economic Outlook from the International Monetary Fund (IMF) forecasts that Europe's total economic output will reach $31.4 trillion (approximately €27 trillion) by 2026. Within this, Germany is projected to lead major European economies with an economic scale of $5.3 trillion, followed by the United Kingdom and France, with nominal GDP reaching $4.2 trillion and $3.6 trillion, respectively. These three major economies together contribute over 40% of Europe's GDP. Italy and Spain, as Southern European economic powerhouses, are expected to achieve moderate growth by 2026, with nominal GDP reaching $2.7 trillion and $2 trillion, respectively. In Eastern Europe, Russia's nominal GDP is forecast to reach $2.5 trillion, primarily benefiting from growth in energy exports.
Economic data to watch today includes the Eurozone's January Sentix Investor Confidence Index, the UK's December SPGI Services PMI Final, and Germany's Preliminary December CPI Annual Rate.
Gold/USD Gold surged significantly yesterday, breaking through the 4400 mark and refreshing a 4-day high, with the current spot price trading around 4470. Rising geopolitical tensions fueling safe-haven demand were the primary driver supporting gold's climb. Additionally, persistent expectations for Federal Reserve interest rate cuts continued to underpin gold. Furthermore, weaker-than-expected U.S. economic data released during the session also provided some support for the precious metal. Today, focus is on resistance near 4530, with support below near 4400.
USD/JPY USD/JPY moved lower in a choppy session yesterday, recording a slight daily decline, with the current spot price trading around 156.30. Aside from profit-taking exerting some downward pressure, a softening U.S. dollar index, weighed down by disappointing economic data, also contributed to the pair's weakness. Moreover, optimistic comments from the Bank of Japan Governor added to the selling pressure. Today, attention is on resistance near 157.00, with support below near 155.50.
USD/CAD USD/CAD edged higher in volatile trading yesterday, testing the 1.3800 level and reaching a fresh 4-week peak, with the current spot price trading around 1.3760. Besides cooling expectations for Fed rate cuts continuing to support the pair, geopolitical tensions spurring risk-off sentiment and weighing on the commodity-linked Canadian dollar also provided a lift. Additionally, weak economic data from Canada released during the session further bolstered the pair. Today, focus is on resistance near 1.3850, with support below near 1.3650.
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