Today at 09:45 (GMT+2), inflation data from France will be released, with the harmonised index expected to adjust from –0.2% to 0.1% month-on-month and from 0.8% to 0.7% year-on-year. At 12:00 (GMT+2), industrial production figures are due, with analysts forecasting a slowdown in the monthly reading from 0.8% to 0.5%, while the annual figure is likely to remain around 2.0%. Weak manufacturing activity continues to be one of the main constraints on a faster recovery, driven by rising costs, higher tariff barriers imposed by the United States, and stronger competition from Chinese manufacturers offering lower-priced products.

Geopolitical tensions are also weighing on the euro. The continuation of the Russia–Ukraine conflict puts pressure on the economies of Eastern European countries, creating risks to energy security and supply chains, while higher energy prices caused by instability in gas and oil supplies increase inflationary pressure and restrain industrial output.

Additional uncertainty stems from the situation surrounding Greenland and northern EU regions. Public statements by US President Donald Trump regarding control over strategic territories and an increased military presence in the region are raising political and economic risks. Against this backdrop, market volatility has increased, and the euro is losing ground as investors seek safety in more stable currencies such as the US dollar or the Swiss franc, as well as in precious metals.

Meanwhile, the US dollar continues to receive support from slightly reduced expectations of aggressive monetary easing by the Federal Reserve following the release of positive economic data. Initially, market attention focused on consumer inflation figures, which showed a monthly reading of 0.3% and an annual rate of 2.7%, while the core index excluding food and energy prices remained at 0.2% and 2.6%, respectively, versus preliminary estimates of 0.3% and 2.7%.

These figures were later complemented by producer inflation data, which analysts viewed as less straightforward. On a monthly basis, the core indicator eased from 0.3% to 0.2%, while the annual reading accelerated from 2.9% to 3.0%, compared with forecasts of 2.7%. This acceleration signals the need to monitor costs and pressure on the business sector, which could influence investor expectations and short-term trend formation. For now, however, traders have focused on retail sales data, which showed growth of 0.6% in November after a –0.1% decline the previous month, exceeding the consensus forecast of 0.4%.

GBP/USD

The pound is undergoing a downward correction in the GBP/USD pair, offsetting the bullish impulse from the previous session and testing the 1.3425 level for a downside breakout ahead of the release of key UK macroeconomic data at 09:00 (GMT+2), which could set the direction for the instrument’s medium-term dynamics. Market participants will focus on November GDP data, which is expected to rise by 0.1% after a similar decline in the previous month.

However, this is unlikely to materially change market expectations regarding the Bank of England’s next steps. At the latest meeting, the balance of views was split: five of the nine Monetary Policy Committee members voted to cut the interest rate to 3.75%, while four supported keeping it unchanged. Policy has become less restrictive following cumulative rate cuts of 150 basis points since August 2024, but officials stress that further decisions will depend on inflation data.

As for industrial production, the monthly figure is expected to slow from 1.1% to 0.1%, pointing to continued pressure on the export sector amid weak demand. The steel industry continues to face restrictions from the EU: in 2025, the European Commission tightened steel import conditions by raising tariffs from 25.0% to 50.0% for volumes exceeding quotas, while total annual tariff-rate quotas were reduced by nearly 44.0% to 18.35 million tonnes.

At the same time, competition from Chinese producers offering significantly lower prices is intensifying. Combined with new fiscal initiatives by the government, including Chancellor of the Exchequer Rachel Reeves’ budget policy involving tax changes amounting to £26.0 billion, this creates risks for the labour market and may increase pressure on corporate profits in the manufacturing sector.

AUD/USD

The Australian dollar shows mixed dynamics during the Asian session, consolidating near the 0.6675 level. Initially, market focus was on US consumer inflation data, which showed a monthly increase of 0.3% and an annual rate of 2.7%, while the core index excluding food and energy prices remained at 0.2% and 2.6%, respectively, versus preliminary estimates of 0.3% and 2.7%.

These figures were followed by producer inflation data, which analysts viewed as ambiguous. On a monthly basis, the core indicator eased from 0.3% to 0.2%, while the annual figure accelerated from 2.9% to 3.0%, compared with forecasts of just 2.7%.

This acceleration highlights the need to monitor production costs and pressure on the business sector, which may influence investor expectations and short-term trends. For now, however, traders—including forex traders—have focused on retail sales data, which showed a 0.6% increase in November after a –0.1% decline a month earlier, beating the consensus forecast of 0.4%. At the same time, the dollar has struggled to develop stronger upward momentum amid ongoing geopolitical uncertainty in Iran, where mass anti-government protests have been taking place since 28 December, driven by an economic crisis, sharp rial depreciation, and high inflation.

In parallel, the Republican administration of the White House has imposed additional 25.0% tariffs on imports from countries continuing trade with the Islamic republic, which could also affect bilateral relations with China and other major importers of Iranian oil.

Australian investors and forex traders are also assessing data from the University of Melbourne, which showed a slight decline in inflation expectations from 4.7% to 4.6%. However, this is unlikely to affect the Reserve Bank of Australia’s stance on further monetary easing.

USD/JPY

The US dollar shows modest gains in the USD/JPY pair, recovering after a moderate decline in the previous session and testing the 158.50 level for an upside breakout, as market participants assess producer inflation data that appeared mixed. On a monthly basis, the core indicator eased from 0.3% to 0.2%, while the annual figure accelerated from 2.9% to 3.0%, compared with expectations of 2.7%.

The main driver of the dollar’s bullish momentum was the retail sales report, which showed a 0.6% increase in November after a –0.1% correction the previous month, exceeding preliminary estimates of 0.4%, while the annual figure remained around 3.3%. In Japan, investors are focusing on corporate goods price index data: in December, the monthly figure declined from 0.3% to 0.1%, and the annual reading fell from 2.7% to 2.4%, in line with analyst forecasts.

Meanwhile, the Japanese yen came under notable pressure following reports of potential plans by Prime Minister Sanae Takaichi to initiate early parliamentary elections. The head of government is seeking voter approval ahead of implementing a large-scale economic programme, with the preservation of accommodative monetary conditions as a key element. These signals conflict with market expectations, which instead price in the possibility of further tightening amid persistent inflation risks and relatively resilient economic growth.

At the same time, some support for the yen continues to come from speculation about possible currency interventions by Japan’s Ministry of Finance, as the exchange rate remains near multi-year lows.

XAU/USD

XAU/USD prices are testing the 4660.0 level for a downside breakout, retreating from record highs. Nevertheless, demand for gold remains relatively stable amid reports from Iran, where mass anti-government protests have been ongoing since 28 December, triggered by an economic crisis, sharp currency depreciation, and high inflation.

At the same time, the Republican administration of the White House has imposed additional 25.0% tariffs on imports from countries continuing trade with the Islamic republic, potentially affecting relations with China and other major importers of Iranian oil.

In public statements, US President Donald Trump warned Tehran of readiness for decisive action, including potential military operations, while Iranian authorities threatened “mirror” strikes against US military bases in the region in the event of a sovereignty violation. As a result, potential disruptions to oil supplies through the Strait of Hormuz and restrictions on energy exports are adding pressure on the dollar and supporting volatility in currency and commodity markets.

Meanwhile, the US dollar remains vulnerable amid discussions over the Federal Reserve’s next monetary policy steps. Recent inflation data confirmed that price growth remains under control and does not currently require rate adjustments, although this outlook could change following labour market data, which presently show relatively stable but gradually weakening trends.

Overall, the US macroeconomic backdrop remains fairly positive. Recent data showed retail sales rising by 0.6% in November after a –0.1% decline the previous month, exceeding forecasts of 0.4%, while the annual figure held at around 3.3%. The control group slowed from 0.6% to 0.4%, while existing home sales rose by 5.1% after a modest 0.7% increase previously, climbing from 4.14 million to 4.35 million in absolute terms.