The US Dollar (USD) ended the week near a four-month low of around 97.80, maintaining a weak tone amid risk aversion in financial markets. Concerns escalated after US President Donald Trump threatened to impose 10% tariffs on eight European countries, which would increase over time unless Denmark agrees to sell Greenland to the US. Tensions remained high until Trump, along with NATO Secretary General Mark Rutte, announced a framework for a future deal regarding Greenland on Wednesday.

In addition, the US released updated data on its Gross Domestic Product (GDP) for the third quarter (Q3), revising the annualized growth rate for the three months ending in September to 4.4%, up from the previous estimate of 4.3%.

The country also published the Personal Consumption Expenditures (PCE) Price Index data for October and November. The report indicated that annual inflation rose to 2.8% in November, up from 2.7% in October. Furthermore, the core PCE Price Index increased by 2.8% in November, following a 2.7% rise in October, which met market expectations.

DXY is trading near the 97.80 weekly low, reaching a multi-week low after lower-than-expected US January preliminary S&P Global Purchasing Managers Indexes (PMIs), which printed 51.9 (52.1 expected) for Manufacturing and 52.5 (52.8 expected) for Services.

EUR/USD: The preliminary estimates of the Eurozone Hamburg Commercial Bank (HCOB) Purchasing Managers’ Indexes (PMIs) were mixed, as the Manufacturing Index improved to 49.4 from 48.8 in December, remaining in contraction territory, while the Services PMI was 51.9, down from 52.4. As a result, the Composite PMI held at 51.5, slightly below the 51.6 anticipated. Next week, the focus will be on the Eurozone and German Q4 GDP, and German inflation for January.

GBP/USD is trading near the 1.3600 price region, a level it hadn’t reached since September 2025. In December, UK Retail Sales rose 0.4% MoM, exceeding estimates for a 0.1% decline. Annually based, sales increased from 1.8% to 2.5%, above forecasts of 1% growth. S&P Global Services and Composite PMIs fared better in January than the December print, with Services output rising from 51.4 to 54.3, the Manufacturing PMI resulting at 51.6 from 50.6, and the Composite PMI rising from 51.4 to 53.9.

USD/JPY is trading near a two-week low at 156.00 after the Bank of Japan (BoJ) decided to keep its policy settings unchanged (0.75%) at its first policy meeting of the year, as expected. In the post-meeting press conference, BoJ Governor Kazuo Ueda refrained from commenting on foreign exchange levels.

AUD/USD is trading close to 0.6880, reaching a level it hadn’t touched since September 2024. This comes as the commodity-heavy currency surges amid record-highs in Gold.

Gold is trading at a record high of $4,988 as geopolitical tensions haven’t eased.

Anticipating economic perspectives: Voices on the horizon

• European Central Bank (ECB) Joachim Nagel will speak in London on Monday.
• On Tuesday, we have another Nagel speech alongside ECB President Christine Lagarde.
• ECB Frank Elderson and Isabel Schnabel will speak on Wednesday.
• ECB Piero Cipollone will speak on Thursday.
• To close the week, Federal Reserve (Fed) Alberto Musalem and Michelle Bowman will be talking on Friday, resuming speaking after the Fed's monetary policy announcement.

Central Banks: Upcoming meetings/releases to shape monetary policies

• ADP Employment Change 4-week average will be released on Tuesday alongside the Bank of Japan monetary policy minutes.
• Wednesday will start with the Australian Consumer Price Index (CPI) for December and continue with the Bank of Canada (BoC) interest rate decision (2.25% current vs 2.25% expected), its monetary policy statement, and a press conference.
• The Fed will release its Interest rate decision (expected to remain unchanged at 3.50%-3.75%), alongside its monetary policy statement on Wednesday.
• Japan will publish Tokyo CPI, Retail Trade, and Unemployment data on Thursday. The US will also release Initial Jobless Claims and the Nonfarm Productivity for Q3.
• On Friday, Germany and the Eurozone will release their respective Q4 flash GDP and unemployment rates. Germany will also release its preliminary Harmonized Index of Consumer Prices (HICP) for January.
• The US will release its December Producer Price Index (PPI) data. At last, China will release the NBS Manufacturing and Non-Manufacturing Purchasing Managers Index (PMI), on January 30.

(This story was corrected on January 23 at 19:46 GMT to correct the preliminary UK Manufacturing PMI reading, which rose to 51.6 in January from 50.6 the previous month, and the spelling of ECB member Cipollone.)