Last weekend, US President Donald Trump once again made harsh statements regarding Greenland, noting that control over the island would strengthen NATO and is currently one of the key national security issues, while also pointing to the growing influence of Russia and China in the Arctic. In addition, the Republican administration of the White House announced new 10.0% tariffs against a number of European states that opposed the hypothetical “acquisition” of Danish territory by Washington and sent their troops there.
The tariffs are expected to come into force as early as February 1 and will be increased to 25.0% from June 1, remaining in place until the United States gains control over Greenland. The situation remains highly uncertain, as it could affect the trade agreements reached between the parties last summer. At that time, the US imposed 15.0% tariffs on almost all European exports, while the EU committed to increasing purchases of American natural gas. Representatives of several EU countries have stated their readiness to act as a united economic front and introduce retaliatory trade restrictions, including limiting access to technology for a number of US companies.
French President Emmanuel Macron said that the EU has “powerful” trade instruments and can counter new restrictions from the United States. Meanwhile, Donald Trump announced the creation of a so-called “Peace Council,” intended as an alternative to the UN, and sent membership proposals to world leaders. France and Germany rejected the proposal, after which the US president did not rule out the introduction of additional 200.0% tariffs on French wine and champagne. Additional support for the euro was provided by macroeconomic data from the eurozone. Germany’s ZEW Economic Sentiment Index rose from 45.8 to 59.6 points in January, well above expectations of 50.0, while the eurozone-wide index increased from 33.7 to 40.8 points versus a forecast of 35.2. Nevertheless, the German government revised its 2026 economic growth forecast down from 1.3% to 1.0%. Although no specific reasons were cited, the downgrade likely reflects rising economic challenges and uncertainty surrounding future tariffs. Costs for German manufacturers continue to rise, while exports are declining amid growing protectionist sentiment.
GBP/USD
The British pound is losing ground against the US dollar, correcting after a period of upward momentum. The pair posted its strongest gains in several days in the previous session but failed to hold at new highs, allowing the US dollar to recover most of its losses by the close. During the US session, only moderate ADP private-sector employment data were released, showing a decline from 11.75 thousand to 8.0 thousand, as expected, signaling growing problems in the domestic labor market.
Meanwhile, UK data released earlier showed employment rising by 82.0 thousand in November after a decline of 17.0 thousand in the previous month. At the same time, jobless claims increased by 17.9 thousand after a decrease of 3.3 thousand, roughly in line with forecasts. Average earnings excluding bonuses slowed from 4.6% to 4.5%, indicating a slight easing of inflationary risks that continue to concern Bank of England officials ahead of potential rate cuts this year. Including bonuses, wage growth slowed from 4.8% to 4.7%, while the unemployment rate held at 5.1% versus expectations of 5.0%. Overall, the data were moderately optimistic: despite stable unemployment, investors welcomed the sharp increase in employment. However, the figures are unlikely to materially change the Bank of England’s plans to ease monetary policy without waiting for inflation to return to the 2.0% target. Moreover, the regulator has not ruled out a possible acceleration in inflation during the first half of the year.
Today, investors and forex traders are assessing UK inflation data. Core CPI excluding food and energy held at 3.2% in December, in line with forecasts, while the headline index accelerated from 3.2% to 3.4% versus expectations of 3.3%. Market participants are also closely watching escalating geopolitical risks following recent statements by US President Donald Trump regarding Greenland. Last weekend, Trump announced new 10.0% import tariffs from February 1 on a number of European countries supporting Denmark in its dispute with the US over control of the island, including the UK, which is already under pressure from high inflation, weak growth, and existing tariffs from both the US and the EU.
AUD/USD
The Australian dollar is showing flat dynamics against the US dollar, holding near the 0.6740 level and the local highs of January 7. Market activity remains subdued as investors refrain from opening new positions while awaiting fresh catalysts. Traders continue to monitor the renewed dispute between the US and the EU over Greenland, which could escalate into a new trade war. Last weekend, President Donald Trump announced new 10.0% tariffs on Germany, France, the UK, Denmark, and other European countries for refusing to grant Washington full control over the island, citing national security concerns.
On Thursday at 02:30 (GMT+2), Australia will release its December labor market report, which may clarify prospects for future interest rate adjustments. Forecasts suggest employment could rise by 30.0 thousand after a drop of 21.3 thousand, while the unemployment rate may edge up from 4.3% to 4.4%. If expectations are met, the Reserve Bank of Australia is unlikely to soften its stance. In the US, updated Q3 2025 GDP data will be released at 15:30 (GMT+2), followed by personal consumption expenditure price index data at 17:00 (GMT+2), a key inflation gauge for the Federal Reserve.
USD/JPY
The US dollar is showing mixed dynamics against the Japanese yen during the morning session, consolidating near 158.20. Traders remain focused on global developments and rising geopolitical tensions. President Donald Trump continues to insist on full US control over Greenland. Over the weekend, the White House announced import tariffs on several European countries that openly supported Denmark and sent troops to the island. The EU has also expressed readiness to introduce restrictive measures against US companies, including limiting access to sensitive technologies.
Meanwhile, the yen is receiving some support from expectations of possible monetary tightening by the Bank of Japan. However, markets do not anticipate higher borrowing costs before April, and only if strong macroeconomic drivers—primarily inflation—emerge. The next BoJ meeting is scheduled for this Friday, though officials are expected mainly to clarify near-term plans. On the same day at 01:30 (GMT+2), Japan will publish its December inflation report, with forecasts pointing to a sharp slowdown in core CPI excluding food and energy from 3.0% to 2.4%. Another factor supporting the yen is the potential for currency interventions by the Ministry of Finance, as USD/JPY remains elevated and misaligned with economic fundamentals.
XAU/USD
Gold continues to systematically update record highs amid rising geopolitical uncertainty, with prices testing the 4860.00 level for an upside breakout. The rally is supported by sharp statements from US President Donald Trump, who remains determined to secure full control over Greenland, citing US and NATO security interests and the need to counter Russian and Chinese influence in the Arctic.
European partners criticized these plans late last week, and some countries even deployed troops to the island. In response, Trump announced additional 10.0% tariffs on imports from several European countries starting February 1, rising to 25.0% from June 1 if no agreement on Greenland is reached. Tensions have also increased elsewhere, including unrest in Iran and recent US military actions in Venezuela, further boosting safe-haven demand for gold.
Another supportive factor for gold prices remains US Federal Reserve policy. While official forecasts still point to only one 25-basis-point rate cut, markets expect at least two or three. Much will depend on incoming macroeconomic data and the stance of the new Fed chair, who will replace Jerome Powell in May. On Thursday at 17:00 (GMT+2), the US will publish personal consumption expenditure price index data, which will help assess near-term inflation risks.
