Market attention is firmly on US inflation as upcoming CPI data is set to shape expectations around interest rates and the US dollar. With volatility building across FX markets, staying informed is key. Catch up on our latest insights in the article below đź”˝
Key Highlight
- Ongoing concerns from the Federal Reserve, combined with political uncertainty in Japan, are influencing market direction
Market Recap
Currency markets were shaped by a softer US dollar, as growing unease around US institutions and the independence of the Federal Reserve weighed on investor confidence. This prompted a more cautious market tone, with the dollar losing ground against most major currencies. Defensive assets benefited from the shift in sentiment, with gold strengthening and both the Swiss franc and euro holding firm against the USD.
Market Overview:
The Japanese yen has come under pressure today amid reports that Japan may call an early general election, adding a layer of political uncertainty to markets. Meanwhile, attention is firmly on US inflation data, with December CPI expected to show rising around 0.4% MoM, lifting annual inflation back toward 2.8%. This rise is largely driven by technical factors linked to earlier data distortions, rather than a fresh surge in inflation. As a result, the figures are unlikely to alter the Federal Reserve’s broader policy outlook, although a stronger-than-expected headline print could temporarily boost the US dollar and push bond yields higher.
13th January 2026
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