USD gains continued into last week's close after the US Supreme Court didn’t issue a ruling on Trump tariffs on Friday. Earlier in the afternoon, USD was knocked after the nonfarm payroll print of 50,000 undershot the expected number of 70,000. The previous month's number was also revised lower and the unemployment rate dropped to 4.4%.
GBPJPY rose to fresh 18-year highs after a report that PM Sanai Takaichi is considering dissolving the lower house of the National Diet.
*Daily move - against G10 rates as of 06:00 GMT, 12.01.26
** Indicative rates - interbank rates as of 06:00 GMT, 12.01.26
Markets have sold off this morning on a “Sell America” theme after the Trump administration intensified attacks on the Federal Reserve, raising fears that the central bank’s independence could be undermined. USD, Treasuries, and US equity futures all fell as investors worried that political pressure could distort monetary policy, weaken policy credibility, and make US assets less attractive compared with non-US markets.
For the week ahead, UK GDP data is expected to reinforce a soft end to 2025, with activity likely flat in Q4 and only a modest 0.1% expansion in November after late-year disruptions.
Germany, by contrast, likely managed modest growth of around 0.3% in 2025 after two years of contraction, helped by improving conditions. Euro-area trade data will be key to gauge whether US demand continues to weaken and whether Chinese exports are being redirected toward Europe.
Stateside, December CPI is expected to show a firmer monthly print, with headline and core inflation both seen rising to 2.8% YoY. The pickup is largely technical, reflecting earlier data distortions. Underlying inflation momentum still looks consistent with the Fed’s 2% target. November retail sales likely rebounded, led by a recovery in auto sales, with headline growth seen at 0.7% MoM. Core control-group sales are expected to cool slightly but remain solid, supported by resilient higher-end and online spending, with promotions continuing to drive activity.
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