Forexlive Americas FX news wrap: US dollar cools despite tariff talk

• CBS: Pres. Trump to announce private sector investment in AI infrasture
• China’s DeepSeek may have just upended the economics of AI
• Canada December CPI 1.8% y/y versus 1.9% expected
• Canada Teranet December house prices +0.8% m/m
• New Zealand GDT price index +1.4%
• BOJ moving towards rate hike at this week’s meeting – report

Markets:

• Gold up $33 to $2741
• US 10-year yields down 4.7 bps to 4.56%
• WTI crude oil down $1.79 to $75.89
• S&P 500 up 0.8%
• GBP leads, CAD lags

The second day of Trump 2.0 was quieter than the first as there were no market-moving pronouncements. We’re expecting Trump to tout a big private-sector data center project shortly but that hasn’t moved anything.

The day started with Trump floating all kinds of tariffs, including 25% of Mexico and Canada. That initially led to a big rally in the US dollar but it flattened in Europe and then completely faded in North American trade. Evidently, the market is concluding that actions speak louder than words and that tariff threats are just negotiating tactics.

Said differently, market participants think that the longer it takes for sweeping tariffs to be announced, the less dramatic and more targeted they will
ultimately be

There is some backing for that belief in Trump’s first term, though he’s certainly talked tougher this time. But the promised 60% tariffs on China from the outset certainly haven’t materialized and that’s led to a relief trade so far.

At the end of the day, most FX pairs are virtually flat with sub-10 pip changes across the board. The lone exception is the loonie, which is down 30 pips on the drop in oil prices. From here, we will take it one tweet at a time.

This article was written by Adam Button at www.forexlive.com.