In particular, the core consumer price index, which excludes food and energy costs, rose by 0.2% month-on-month and 2.6% year-on-year in December, falling short of analysts’ expectations of 0.3% and 2.7%, respectively. Meanwhile, the broader indicator increased by 0.3% and 2.7%, fully in line with preliminary estimates. This restrained inflation dynamics shifts the consensus outlook toward a more gradual pace of interest rate cuts in 2026, although experts still expect at least one 25-basis-point reduction in the first quarter.
Commenting on the inflation data, U.S. President Donald Trump once again pointed to the need to cut interest rates to 1.0% to support economic activity and stimulate investment, while traditionally criticizing the Federal Reserve for the untimeliness of its decisions.
Today at 15:30 (GMT+2), U.S. investors are awaiting retail sales data, with volumes potentially rising to 0.4% after flat growth last month, while the annual figure is likely to be around 3.5%. Meanwhile, the market remains focused on France’s government budget balance report, which measures the gap between revenues and expenditures: in November, as analysts expected, the deficit widened from €136.17 billion to €155.4 billion, reflecting an alarming situation not only for the national economy but for the euro area as a whole.
Earlier, European Central Bank (ECB) President Christine Lagarde noted that, in her view, EU member states have managed to offset the negative impact of higher U.S. import tariffs, and that economic growth will now be supported by domestic demand, investment, and a resilient labor market. Growth is projected at 1.2% in 2026 and 1.4% in 2027–2028. Lagarde emphasized that the regulator is currently “in a good position” but may resort to various actions amid high uncertainty related to geopolitics, trade, and wage dynamics. Key data for European investors this week will be industrial production and the trade balance, due tomorrow at 12:00 (GMT+2): output volumes are likely to stand at around 2.0% year-on-year and decline from 0.8% to 0.5% month-on-month, while the trade surplus is expected to adjust downward from €18.4 billion to €15.2 billion.
GBP/USD
During the Asian session, the pound is extending a bearish impulse and testing the 1.3420 level for a downside breakout, while traders await new catalysts. Support for the dollar came from steady U.S. inflation data, which reduced expectations of further monetary policy easing.
In December, the consumer price index rose by 0.3% month-on-month and reached 2.7% year-on-year, while the core index increased by 0.2% and 2.6%, respectively—below preliminary forecasts of 0.3% and 2.7%. In addition, investors and forex traders are analyzing December retail sales data from the British Retail Consortium (BRC), which slowed from 1.2% to 1.0% against expectations of 1.3%, while food sales growth accelerated to 3.1%. On Thursday at 09:00 (GMT+2), a broad set of key macroeconomic data will be released, with GDP and industrial production reports being the most important. Forecasts suggest zero economic growth for the UK after a 0.1% contraction in October, while industrial activity is expected to slow from 1.1% to 0.0% month-on-month and remain negative at –0.8% year-on-year.
NZD/USD
The New Zealand dollar is showing moderate gains against the U.S. dollar during the Asian session on January 14, testing the 0.5745 level for an upside breakout and rebounding from local lows recorded on December 2 and updated at the end of last week. Support came from a 2.8% increase in building consents in New Zealand in November following a –0.7% decline in the previous month, exceeding analysts’ average estimates.
Market participants also assessed a report from the New Zealand Institute of Economic Research on business confidence in the fourth quarter, which surged from 18.0% to 48.0%. Such a sharp improvement reflects stronger business confidence in the country’s macroeconomic outlook, positive expectations for domestic and external demand, and corporate investment, potentially boosting production capacity and employment while supporting the national currency and attracting capital to equity and debt markets. Meanwhile, Chinese data showed exports rising by 6.6% year-on-year, above November’s 5.9% and forecasts of 3.0%, while imports jumped from 1.9% to 5.7%, far exceeding expectations of 0.9%. As a result, the trade surplus increased from $111.68 billion to $114.1 billion. U.S. investors are now awaiting a broad set of macroeconomic releases, including producer price indices for October and November, retail sales data, and the Federal Reserve’s Beige Book. Markets are closely watching for any signals that could affect policy rhetoric and future monetary adjustments.
USD/JPY
The U.S. dollar is showing modest gains against the Japanese yen near 159.22, extending a short-term uptrend and updating July 2024 highs. Recently released inflation data were neutral and failed to confirm expectations of even a minimal 0.1% acceleration both month-on-month and year-on-year, reinforcing the Federal Reserve’s case for maintaining a pause in its dovish cycle and limiting rate cuts in 2026 to just one 25-basis-point move. This week, analysts at JPMorgan Chase & Co. also suggested a complete halt to additional easing, with chief economist Michael Feroli noting that the U.S. economy could post solid growth in the first half of the year while price pressures remain relatively stable.
Under these conditions, justifying further rate cuts would be difficult, even as pressure on the Fed from the Republican White House administration intensifies. The four-year term of current Fed Chair Jerome Powell ends in May, and Kevin Hassett—a close ally of President Donald Trump who supports aggressive easing despite persistent inflation risks—is currently seen as the leading candidate to succeed him. Meanwhile, the Bank of Japan may be preparing for another rate hike, potentially as early as April.
Analysts highlight accelerating changes in monetary conditions amid sharp yen depreciation and the aggressive fiscal policy of new Prime Minister Sanae Takaichi. The yen has already weakened beyond levels that prompted currency intervention by Japan’s Ministry of Finance in 2024. Recently released Japanese macroeconomic data did little to support the currency: bank lending growth accelerated from 4.1% to 4.4% year-on-year, beating neutral forecasts, while the Eco Watchers current conditions index slipped from 48.7 to 48.6, contrary to expectations of an increase to 48.8.
XAU/USD
Gold prices are consolidating near 4628.0 amid a brief strengthening of the U.S. dollar following the release of stable December inflation data, which reduced expectations of further monetary easing. The monthly CPI stood at 0.3% and the annual rate at 2.7%, while the core measure remained at 0.2% month-on-month and 2.6% year-on-year, versus preliminary estimates of 0.3% and 2.7%.
Markets also reacted to a decline in the Economic Optimism Index calculated by Investor’s Business Daily (IBD) together with the Institute of Public Opinion, which fell from 47.9 to 47.2 in January, below most forecasts of 48.2. At the same time, the NFIB Small Business Optimism Index edged up from 99.0 to 99.5 in December.
Meanwhile, heightened investor interest in gold as a traditional safe-haven asset is driven by rising geopolitical uncertainty, particularly amid large-scale protests in Iran—the biggest since 2022. Initially triggered by deteriorating macroeconomic conditions, including inflation accelerating to 42.5%, soaring food prices, and a sharp depreciation of the Iranian rial, the protests have since taken on a pronounced political character, with calls for a change of power and the resignation of Supreme Leader Ali Khamenei.
