Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
US yields retreat ahead of inauguration
The greenback declined broadly as markets positioned for Trump’s return, with Treasury yields falling 3-5bps across the curve amid unwinding of short positions.
The USD index weakened through the session as Treasury Secretary nominee Bessent’s testimony spurred profit-taking, while equities pulled back with the Nasdaq dropping 0.9%.
The Canadian dollar slumped markedly, sending USD/CAD up from 1.4330 to 1.4390 as the market priced growing tariff risks.
USD/CNH traded in a narrow 7.3430-7.3500 range ahead of today’s key Chinese data releases.
USD/JPY extended its decline to 155.10, pointing to further potential downside with next support at 154.61.
UK retail sales, Chinese GDP, retail sales and industrial production all due today.
UK retail sales to remain flat on Black Friday timing
Today will see the release of UK retail sales.
Due to the timing of Black Friday (the BRC recorded Black Friday in the December reporting period in 2024, resulting in a significant decline in November’s annual sales growth and a sharp rebound in December), retail surveys have given a poor indication of the underlying trend in spending over the past two months.
In December, we projected a flat monthly result on retail sales volumes excluding motor fuel.
The next significant support levels for GBP/USD are in the 1.18-handles and close to 1.20.
Malaysia Q4 GDP growth to surge
Today, Malaysia’s actual GDP will be released.
Due in part to base effects, we anticipate that the advance estimate of Q4 GDP will increase significantly to 6.4% year over year from 5.3% in Q3.
Sequentially speaking, this means that following two strong rises of 1.8% in Q3 and 2.9% in Q2, GDP growth slowed to 0.1% q-o-q.
With the exception of the mining industry, we anticipate that growth momentum will continue to be good. Specifically, in the midst of the global tech upcycle, manufacturing growth should continue, driven by electronics items.
Due to the execution of infrastructure projects and robust investment spending, the construction industry’s growth probably stayed in the double digits.
USD/MYR next key support levels are at 4.4891 and 4.4568, where USD buyers may look to take advantage.
Dollar eased on Trump’s upcoming inauguration
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 13 – 18 January
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
