Trump did not fly Airforce One into Davos and the WEF Conference, but he did make a dramatic entrance, via Video-link. Trump outlined a strategy of forcing interest rates lower in the US, and around the world, plus the cutting oil prices. He also was focused on trade and more particularly the trade deficit with the EU. He promised action to right this wrong. He has suggested balance, by increasing energy sales to the EU and allowing increased imports from the USA, by deregulation. The hammer that hangs over the EU’s head is ‘Tariffs’. This was enough to unsettle the recently improved EUR, briefly falling back below 1.0400, while the GBP pushed up to 1.2340.Commodity currencies continue to benefit the weaker reserve, with the AUD pushing up towards 0.6300, while the NZD consolidates above 0.5650. Local markets await key PMI data from both Japan and Australia, while the focus will be on Japan. Japan released strong trade numbers yesterday and now the focus is on the CPI number, set to be released before the Bank of Japan meeting. If inflation remains a problem, expect the Bank of Japan to ‘buck the trend’, and raise interest rates.
