The Morning Update

 The U.S. dollar strengthened alongside a rally in oil prices, while equities and bond yields remained broadly stable. U.S. economic data released today, led by the CPI report, are expected to show modest inflation pressures, while tomorrow’s PPI will complete the near-term inflation outlook and inform Fed policy expectations. Following the DOJ’s subpoena of Federal Reserve Chair Jerome Powell, Treasury Secretary Scott Bessent pushed back against the investigation,warning that it has “made a mess” and risks undermining market stability and confidence in the Federal Reserve’s independence.

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News Headlines. President Donald Trump has been briefed on potential military and covert options regarding Iran, including long-range missile strikes, cyber operations, and psychological campaigns, according toU.S. defense officials. The developments come as Washington urges U.S. citizens to leave Iran, Trump announces a 25% tariff on countries trading with Tehran,and Iranian officials signal openness to talks while warning they remain prepared for war amid a crackdown on protests. Promised releases of opposition figures, civil society leaders and journalists in Venezuela have been limited,drawing criticism that the government is failing to abide by its agreement. Human rights groups say more than 800 people remain imprisoned for political reasons, leaving families anxiously awaiting clarity from authorities. Mexican President Sheinbaum said she ruled out any U.S. military intervention against drug cartels following a “good conversation” with President Donald Trump,emphasizing continued cooperation on security within the framework of Mexico’s sovereignty and without subordination. Republican Rep. Randy Fine introduced legislation to authorize President Donald Trump to pursue the acquisition of Greenland, though the bill is widely seen as unlikely to pass Congress.

In currency markets.  Japanese Prime Minister Takaichi has signaled her intention to dissolve the lower house of parliament at the start of the regular session on January 23. Asian currencies weakened as the U.S. dollar firmed, with the Japanese yen sliding to multi-month lows amid higher oil prices and policy uncertainty. The Korean won and Indian rupee also came under pressure as cautious central bank outlooks and geopolitical risks weighed onr egional FX sentiment. AUD and NZD softened against the USD, down 0.57% and 0.40% respectively, while the JPY fell 0.50% (1.45% on the week) and the THB declined 0.76%. Emerging-market currencies were mixed, with the ZAR losing ground against the dollar and the MXN gaining 0.11%.

In commodity markets. Energy prices are edging higher, with oil up 1.85% and natural gas gaining 1.05%. Metals are mixed, as gold slips 0.20% while silver rises 0.65% and lithium jumps 5%; notably, silver is up 34% over the past month and lithium has surged 68%. In agriculture, wheat and soybeans fell 0.32% and 0.69% respectively, while lumber rallied 1.33%.

Current level USDIndex               98.954         Up 0.09%

In commoditymarkets. Energy prices are edging higher, with oil up 1.85% and natural gas gaining 1.05%. Metals are mixed, as gold slips 0.20% while silver rises 0.65% and lithium jumps 5%; notably, silver is up 34% over the past month and lithium has surged 68%. In agriculture, wheat and soybeans fell 0.32% and 0.69% respectively, while lumber rallied 1.33%.

Current levelUSDIndex               98.954         Up 0.09%

USD/CAD is trading sideways below 1.3900, with gains capped as markets await U.S. inflation data, starting with CPI today and PPI on Wednesday. A firmer U.S. dollar offers support but concerns over Fed independence and rising oil prices underpin the Canadian dollar, limiting upside.

Current levelUSD/CAD                  1.3878            Up 0.04%

EUR/CAD remains near recent weekly highs as the euro holds ground against the Canadian dollar. The pair’s strength reflects ongoing CAD pressure from mixed economic cues and oil market dynamics

Current levelEUR/CAD                  1.6193           Up 0.04%

EUR/USD is trading largely flat near 1.1665 after rebounding from early lows, as comments from New York Fed President JohnWilliams helped ease concerns over the central bank’s independence and stabilize the U.S. dollar. Attention now turns to today’s U.S. CPI release,with inflation expected to remain above the Fed’s target, potentially reinforcing a hawkish policy stance.

Current levelEUR/USD                  1.1666             Up 0.01%

GBP/EUR is trading sideways near 0.8650 as investors assess diverging BoE and ECB policy outlooks. Focus remains on weak UK labor data and upcoming GDP figures, while the euro tracks broader market sentiment.

Current levelGBP/EUR       1.1574 (0.8660)        Up 0.01%

GBP/USD is holding near recent highs ahead of the U.S. CPI release, with investors watching for inflation signals but expecting limited near-term market impact. Fed officials remain divided, with policy focus tilted toward labor market risks despite inflation staying elevated.

Current levelGBP/USD                  1.3471             Up 0.06%

Other ccy levelsvs C$. GBPCAD 1.8692. AUDCAD .9307,CADJPY 114.51. CADSEK 6.6093. CADNOK 7.2563. CADCHF .5753. CADZAR 11.8383. CADDKK 4.6109. CADCNY 5.0625.

Other ccy levelsvs USD. JPY 158.85. ZAR 16.4211.KWD 0.3077. AUD.6705. NZD.5764. MXN 17.9027. CNY 6.9747. CHF 0.7982. NOK 10.0676SEK 9.1766. INR 90.20. ILS 3.1461. CZK 20.7836.

Other Major Xlevels. CHFJPY 198.97. AUDCHF .5351.AUDJPY 106.47. EURAUD 1.7403. GBPAUD 2.0093. EURSEK 10.7075. EURNOK 11.7475. GBPCHF1.0751. EURCHF .9314. EURJPY 185.33.

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