Yuan’s rally lacks fundamental support despite 2025 gains, former SAFE regulator saysUS hosts G7 talks on rare earths to counter China’s supply dominanceUK hiring weakens again as wage growth stays firm, complicating BoE outlookTrump threatens to block Exxon from Venezuela after CEO calls country uninvestablePBOC sets USD/ CNY reference rate for today at 7.0108 (vs. estimate at 6.9849)Gold and silver surge, stocks & USD slammed on news of Trump's ongoing attacks on the FedFed Chair Powell calls out Trump on his witch hunt, part of ongoing threats against BankNYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutinyWall Street Journal: "U.S. Steps Up Planning for Possible Action in Iran"Globex trade is open for the week, US equity index futures with small gap downEUR wobbles - France budget at risk as confidence votes threaten government collapseICYMI: Japan's PM Takaichi is considering calling a snap election for mid-FebruaryMonday open indicative forex prices, 12 January 2026Weekend:Europe moves to boost NATO Arctic presence to counter Trump’s Greenland rhetoric/threatTrump orders special forces to draft Greenland invasion plan - UK Sunday Daily Mail reportNewsquawk Week Ahead: US Earnings, US CPI, US Retail Sales, UK GDP, and China TradeTrump floats one-year 10% credit-card rate cap, offers zero enforcement detail, just talkSummary:USD slides on Fed independence fears: Dollar fell sharply after Powell said the Justice Department issued grand jury subpoenas, reviving concerns over political pressure on the Federal Reserve.Markets turn defensive: Gold and silver surged, US equity futures fell, and risk sentiment weakened as institutional risk re-entered pricing.Senate pushback escalates: Senator Thom Tillis said he will block confirmation of any Fed nominee until the investigation into Powell is resolved, raising leadership uncertainty.Oil supported by Iran risks: Crude prices rose on fears protests in Iran could disrupt up to 1.9 mbpd of exports, though gains were capped by Venezuela uncertainty.Trump–Exxon tensions resurface: Trump said he may block Exxon from investing in Venezuela after the company’s CEO called the country “uninvestable.”The US dollar suffered its sharpest setback in almost three weeks after Federal Reserve Chair Jerome Powell disclosed that the central bank had received grand jury subpoenas from the Justice Department. Powell characterised the move as a politically motivated attempt by the Trump administration to influence monetary policy, reviving long-standing concerns around Federal Reserve independence.The remarks rattled markets. The Bloomberg Dollar Spot Index fell around 0.2%, US equity index futures moved lower, and strategists warned that renewed institutional risk could undermine the greenback. The dollar weakened broadly against G10 peers, though it later clawed back ground against a notably weak yen, while gold and silver surged sharply as investors sought protection from political and policy uncertainty.Political fallout intensified when Republican Senator Thom Tillis, a senior member of the Senate Banking Committee, said he would block confirmation of any Federal Reserve nominee, including the next Fed chair, until the legal maters are resolved. Tillis said the episode removed any doubt that efforts were under way to erode Fed independence, adding that the credibility of the Justice Department itself was now at stake. Note that if a successor is not confirmed, Powell would remain in the role beyond the end of his current term.In commodities, oil prices extended gains as rising protests in Iran stoked concerns over potential supply disruptions from the OPEC producer. Analysts noted calls for oil workers to down tools, warning that as much as 1.9 million barrels per day of Iranian exports could be at risk if unrest escalates. President Donald Trump added to the geopolitical backdrop, saying the US has “strong options” to respond to any Iranian attack with overwhelming force.Trump said he may block Exxon Mobil from investing in the country after the company’s CEO described Venezuela as “uninvestable,” underscoring the political and legal risks that continue to complicate any rapid recovery in Venezuelan oil output. Note the weekend news above, plenty of Arctic geopolitics! Asia-Pac stocks:Japan (Nikkei 225) +1.6%Hong Kong (Hang Seng) +0.86% Shanghai Composite +0.75%Australia (S&P/ASX 200) +0.41%This is real, Trump on his 'Truth' app: This article was written by Eamonn Sheridan at investinglive.com.

Summary:Yuan rose 4.5% in 2025, its best year since 2020Former SAFE official says gains lack fundamental backingStrength driven by weaker dollar demand, not inflowsFalling REER does not imply undervaluationDisinflation and output gap argue against stronger yuanYuan’s rebound lacks fundamental backing despite 2025 gains, former FX regulator warns. Info via Reuters report. The Chinese yuan’s appreciation against the US dollar over the past year does not signal a broader revaluation of the currency or Chinese assets, and lacks support from underlying economic fundamentals, according to Guan Tao, a former senior official at China’s foreign-exchange regulator.The yuan rose about 4.5% against the dollar in 2025, snapping three consecutive years of decline and marking its strongest annual performance since 2020. The rebound has fuelled market speculation that the currency may be structurally undervalued and poised for further gains.However, Guan, now global chief economist at Bank of China International Securities and formerly with the State Administration of Foreign Exchange, cautioned against drawing such conclusions. Writing on his official WeChat account, Guan said claims of yuan undervaluation “lack support from data, facts or theory.”He argued that recent improvements in China’s foreign-exchange conditions have been driven mainly by weaker demand for US dollars rather than stronger confidence in converting foreign currency into yuan. In other words, reduced capital outflows — not rising inflows — have underpinned the currency’s gains.Some investors have pointed to China’s falling real effective exchange rate (REER) and its sizeable goods trade surplus as evidence that the yuan is undervalued. But Guan warned that REER depreciation does not automatically imply mispricing or an inevitable appreciation cycle. According to Bank for International Settlements, China’s REER has fallen nearly 17% since peaking in March 2022.Domestically, Guan said persistent disinflationary pressures argue against a stronger currency. China’s price levels remain subdued, nominal growth continues to lag real growth, and the economy is operating with a negative output gap — conditions that traditionally point to downward pressure on the exchange rate. Producer prices have been falling for more than three years, while full-year consumer inflation in 2025 was the weakest in 16 years, despite a late-year pickup.Guan also challenged the assumption that a stronger yuan would automatically attract foreign capital. While appreciation can lift returns on existing investments, it raises the entry cost for new inflows. Whether capital ultimately increases, he said, depends on the balance between these opposing forces. ---State Administration of Foreign Exchange (SAFE) is China’s foreign-exchange regulator, responsible for managing the country’s FX reserves, overseeing cross-border capital flows, and enforcing currency and balance-of-payments rules. This article was written by Eamonn Sheridan at investinglive.com.

Summary:US hosting G7 ministerial talks on rare earthsAim is to reduce dependence on China-dominated supply chainsTreasury Secretary Bessent to lead discussionsJapan pushing issue amid China export curbsFocus on defence, tech and clean-energy mineralsUS to host G7 talks on rare earths as allies seek alternatives to ChinaThe United States will host a meeting of Group of Seven ministers this week focused on rare earths and other critical minerals, as Washington and its allies intensify efforts to reduce reliance on China’s dominant position across global supply chains.The discussions, scheduled to take place in Washington, will be led by US Treasury Secretary Scott Bessent and are expected to centre on developing alternative sources of supply, boosting processing capacity outside China, and coordinating investment frameworks among allied economies. Canadian Finance Minister François-Philippe Champagne is set to meet counterparts on Sunday and Monday, with officials from Australia, South Korea, India, Mexico and the European Union also expected to attend.Rare earth elements and other critical minerals are essential inputs for defence systems, electric vehicles, renewable energy technologies and advanced semiconductors. While mining is geographically dispersed, China controls a commanding share of global refining and processing capacity, giving Beijing significant leverage during periods of geopolitical tension.Japan has emerged as a vocal advocate for coordinated action following recent Chinese export restrictions affecting strategic materials. Tokyo has been engaging G7 partners on the issue, with concerns sharpened after comments by Prime Minister Takaichi Sanae on Taiwan heightened sensitivities around supply security in East Asia.Japanese Finance Minister Katayama is expected to raise the importance of securing stable access to minerals critical for both military hardware and high-technology manufacturing during her visit to the United States. Japanese officials have long warned that supply disruptions could quickly ripple through global production chains, particularly in electronics and automotive sectors.The G7 talks reflect a broader shift among advanced economies toward “friend-shoring” and diversification of strategic supply chains. However, building alternative capacity will take years, requiring substantial investment, environmental approvals and policy coordination. In the near term, officials are likely to focus on shared stockpiling strategies, financing mechanisms and diplomatic engagement with resource-rich emerging markets. This article was written by Eamonn Sheridan at investinglive.com.

Summary:UK hiring fell for a 39th straight month in DecemberPermanent placements declined at the fastest pace in four monthsStarting salaries rose at the strongest rate since MayPayroll tax rises continue to weigh on recruitmentBoE faces tension between weaker jobs data and wage pressuresBritain’s labour market showed further signs of cooling at the end of 2025, even as wage pressures remained elevated, reinforcing the policy dilemma facing the Bank of England as it weighs the timing and pace of future interest-rate cuts.A closely watched survey from the Recruitment and Employment Confederation and KPMG showed hiring activity weakened again in December, marking the 39th consecutive monthly decline in permanent staff placements. The downturn was the steepest in four months, underscoring persistent caution among employers amid higher costs and an uncertain economic outlook.Businesses have increasingly pointed to the payroll tax increase introduced in Chancellor Rachel Reeves’ 2024 budget as a key factor restraining recruitment. Combined with elevated borrowing costs and subdued growth, firms continue to limit headcount expansion and rely more heavily on temporary staff to retain flexibility.Despite the slowdown in hiring, pay growth showed renewed momentum. Starting salaries for permanent roles rose at the fastest pace since May, reflecting ongoing competition for workers with in-demand skills. Even so, wage growth remained below its long-run average, suggesting some easing from the peaks seen earlier in the inflation cycle.Survey respondents noted a modest rise in candidate availability alongside falling vacancies, a pattern consistent with a gradual loosening of labour market conditions. Temporary hiring also declined, weighed down by weak business confidence and cost concerns.---The BoE cut interest rates by 25 basis points to 3.75% in December, but policymakers remain divided between those focused on sticky wage-driven inflation and others warning of a more pronounced labour market slowdown.Financial markets currently expect one or two additional quarter-point rate cuts in 2026. However, the persistence of pay growth, even as hiring weakens, complicates the outlook and suggests the BoE is likely to proceed cautiously as it assesses whether easing inflation pressures are sufficiently entrenched. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Trump says he may block Exxon from investing in VenezuelaCEO Darren Woods called the country “uninvestable”Exxon cited past asset seizures and weak legal protectionsTensions complicate US efforts to revive Venezuela’s oil sectorHighlights gap between political goals and commercial risk-Trump threatens to block Exxon from Venezuela after CEO brands country ‘uninvestable’US President Donald Trump signalled a potential rift with America’s largest oil producer after saying he may prevent Exxon Mobil from investing in Venezuela, following blunt comments by the company’s chief executive questioning the country’s investment viability.Speaking to reporters aboard Air Force One on Sunday, Trump said he was unhappy with Exxon’s stance after CEO Darren Woods described Venezuela as “uninvestable” during a White House meeting last week. Trump said Exxon was “playing too cute” and suggested he would be inclined to exclude the company from any future reopening of Venezuela’s oil sector to US firms.The comments represent a setback for Trump’s broader push to persuade American energy companies to commit billions of dollars to revitalise Venezuela’s oil industry following years of sanctions, underinvestment and operational decline. Washington has been exploring ways to leverage US corporate involvement to stabilise output while exerting political influence over Caracas.Woods’ remarks reflected long-standing industry concerns. Exxon has twice had assets expropriated in Venezuela, most notably during the nationalisations under former president Hugo Chávez. Woods told Trump that re-entering the country a third time would require “significant changes,” including durable legal protections for foreign investors and reforms to Venezuela’s hydrocarbons law.“If you look at the legal and commercial frameworks in place today, it’s uninvestable,” Woods said, arguing that without structural reform, capital deployment would expose shareholders to unacceptable political and legal risk.Trump’s reaction underscores the tension between political objectives and commercial realities. While the administration is eager to draw US firms back into Venezuela as part of a broader reset in relations, major oil companies remain wary of regulatory instability, contract sanctity and the risk of renewed state intervention.Exxon did not immediately respond to Trump’s remarks. For markets, the episode highlights the limits of US policy leverage over corporate investment decisions and reinforces scepticism that Venezuela can rapidly attract large-scale foreign capital without deep legal and institutional reform. This article was written by Eamonn Sheridan at investinglive.com.

The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a "band," around a central reference rate, or "midpoint." It's currently at +/- 2%. The previous close was 6.9784.Injects 86.1bn yuan, 7-day RRS, 1.4% This article was written by Eamonn Sheridan at investinglive.com.

The news broke that Trump is escalating his underhanded attacks on the Federal Reserve:NYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutinySummary:NYT reports federal prosecutors have opened a probe involving Fed Chair PowellSpecific allegations and scope are unclear from the headline aloneContext includes intense political attacks over Fed HQ renovation costsPowell previously requested an inspector general review of the projectAny escalation could raise Fed-independence risk premia into the 2026 chair transitionFed Chair Powell Fed Chair Powell calls out Trump on his witch hunt, part of ongoing threats against BankSummaryPowell says DOJ threatened criminal indictmentGrand jury subpoenas served on FridayIssue linked to Senate testimony on Fed renovationPowell calls move unprecedented and politicalRaises concerns over Fed independenceFederal Reserve Chair Jerome Powell says Trump’s Department of Justice has subpoenaed the central bank. In a statement: "No one, certainly not the chair of the Federal Reserve,is above the law," Powell said. "But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure."In the back half of last week Trump ramped up the populist policy setting ina a bid to ramp stocks higher in this election year:ordering “his representatives” to buy mortgage bonds to push borrowing costs lower, banning institutional investors from buying single-family homes.Trump floats one-year 10% credit-card rate cap, offers zero enforcement detail, just talkHis latest baloney attacking the Fed threatens to undo the gains, Trump cannot seem to undestand that attacks on Fed independence do not play well with those managing stock market funds. Running to gold and silver instead. EURO, too, is higher. The USD is lower across the majors board. Australian dollar, UK GBP, New Zealand dollar, Swissy ... even the hapless yen is gaining!!! This article was written by Eamonn Sheridan at investinglive.com.

Summary:Powell says DOJ threatened criminal indictmentGrand jury subpoenas served on FridayIssue linked to Senate testimony on Fed renovationPowell calls move unprecedented and politicalRaises concerns over Fed independencePowell responding to Trump's latest slimy attack:NYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutinyPowell says Justice Department threatened indictment in unprecedented challenge to Fed independenceFederal Reserve Chair Jerome Powell said the US Justice Department has threatened criminal charges against him in connection with his Senate testimony last year, describing the move as unprecedented and a direct challenge to the Federal Reserve’s independence.In a statement released Friday, Powell said grand jury subpoenas were served earlier in the day and confirmed that the matter relates to his June testimony concerning the multiyear renovation of the Fed’s historic Washington headquarters. However, Powell stressed that the latest threat was “not about my testimony or the renovation project itself,” calling it a pretext rather than a substantive legal dispute.Powell framed the episode as part of broader political pressure on the central bank, arguing that the threat of criminal charges stems from the Fed’s refusal to set interest rates in line with the president’s preferences. “The broader issue,” Powell said, “is whether the Federal Reserve will continue to set interest rates based on evidence and economics, or be directed by political pressure and intimidation.”The Fed chair said he holds deep respect for the rule of law but warned the action should be viewed in the context of what he described as ongoing threats by the administration against the central bank. Powell added that he has carried out his duties “without political fear or favor” and intends to continue doing so.The remarks mark a sharp escalation in tensions between the Fed and the executive branch, following months of criticism over the pace of rate cuts and scrutiny of the Fed’s costly headquarters renovation. Powell previously asked the Fed’s inspector general to review the project amid political attacks, seeking to demonstrate transparency as criticism intensified.Any formal criminal case involving a sitting Fed chair would be without modern precedent and risks amplifying concerns about institutional independence at a sensitive point in the policy cycle. Powell’s term as Fed chair runs until mid-2026, making the episode especially significant as markets assess leadership continuity, credibility, and the Fed’s ability to operate free from political interference. This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

Summary:NYT reports federal prosecutors have opened a probe involving Fed Chair PowellSpecific allegations and scope are unclear from the headline aloneContext includes intense political attacks over Fed HQ renovation costsPowell previously requested an inspector general review of the project Any escalation could raise Fed-independence risk premia into the 2026 chair transitionFederal prosecutors have opened an investigation involving Federal Reserve Chair Jerome Powell, according to a report by The New York Times. Details of the alleged probe, including its scope, the responsible US attorney’s office and any potential allegations were not immediately clear from the headline alone, and US authorities typically do not confirm investigations.Still, the report lands against a well-publicised backdrop of escalating political pressure on Powell and the Fed, with criticism focused on the central bank’s expensive renovation of its Washington headquarters and broader White House frustration over the pace of rate cuts. In mid-2025, Powell asked the Fed’s inspector general to take a fresh look at the renovation project costs amid intensifying attacks from Trump administration officials and Republican lawmakers. The renovation dispute has also spilled into Congress. In July 2025, reporting indicated a Republican lawmaker had renewed calls for a Justice Department probe into Powell, alleging potential false statements related to renovation features, a dynamic that has fuelled market concerns about Fed independence and a possible institutional showdown. For markets, any confirmed prosecutorial action around a sitting Fed chair would be a high-signal event: it could amplify uncertainty over policy continuity, complicate the Fed’s communications, and sharpen the political risk premium in rates and the dollar, especially with Powell’s chair term due to end in May 2026, while his term as a governor runs longer. The key near-term questions are whether the reported probe is tied to the renovation controversy (and related testimony), whether it is preliminary fact-finding or a formal grand-jury process, and whether it meaningfully changes the timeline for a leadership transition already in motion. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Trump to receive formal briefing on Iran response optionsMeasures include sanctions, cyber tools and possible strikesPentagon has not repositioned forces yetStarlink internet access under considerationRisk of regional escalation remains highWall Street Journal with the report, link. The United States is stepping up contingency planning for possible action against Iran, with President Donald Trump set to receive a formal briefing from senior officials on Tuesday covering a range of military, cyber and economic responses to Tehran’s crackdown on anti-government protests, according to people familiar with the discussions.The meeting is expected to include Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, and Joint Chiefs Chairman Dan Caine. Officials stress that deliberations remain at an early stage and that no final decisions are expected this week.Options under review include expanding sanctions on Iran’s leadership and security services, deploying covert cyber tools against military and civilian infrastructure, and considering limited military strikes. Another proposal involves sending Starlink satellite internet terminals into Iran to help protesters circumvent recent government-imposed internet shutdowns.The discussions come amid heightened regional tensions and increasingly forceful rhetoric from Trump, who has warned Tehran against using lethal force on demonstrators and said the US is prepared to act if protesters are killed. Iranian officials have responded by threatening attacks on US military bases should Washington intervene.Despite the tough language, the Pentagon has not repositioned forces for potential strikes. The US would need to deploy assets both to conduct operations and to protect personnel across the Middle East. Recent movements have left the US without an aircraft carrier stationed in either the Middle East or Europe, underlining the preliminary nature of the planning.Some administration officials have raised concerns that overt US or Israeli intervention could bolster Iranian regime claims that the protests are being orchestrated by foreign powers, potentially undermining the movement’s domestic legitimacy. Others warn that symbolic measures that fail to weaken the regime could disillusion protesters expecting tangible US support.The talks follow recent US strikes against Islamic State targets in Syria and ongoing coordination with Israel on regional security, underscoring the risk that any move on Iran could escalate into a broader confrontation. This article was written by Eamonn Sheridan at investinglive.com.

US equity index futures are opening lower on Globex to begin the week's trade. I guess I should come up with a narrative to 'explain', right? M'eh. The gap is small. If I had to pin it on anything it'd be the ratcheting higher of geopolitical tensions. But, I really wouldn't bother too much. The gap is very small and the week is just beginning. Also but, if you have alternative explanations, let me know in the comments. Re Nikkei:ICYMI: Japan's PM Takaichi is considering calling a snap election for mid-FebruarySummary:LDP lawmakers expect possible Lower House dissolution in late JanuarySnap election could be held as early as FebruaryTakaichi citing inflation relief and economic impact as prioritiesRuling bloc holds slim Lower House majority, Upper House minorityElection logistics already being quietly preparedEarlier:EUR wobbles - France budget at risk as confidence votes threaten government collapseSummary:France warns 2026 budget may be delayed past March electionsConfidence votes next week threaten government survivalPossible National Assembly dissolution if government fallsBudget talks already late amid deficit concernsPolitical uncertainty weighs on fiscal credibilityEurope moves to boost NATO Arctic presence to counter Trump’s Greenland rhetoric/threatSummary:UK and Germany are leading talks on boosting European and NATO military presence in Greenland.Germany plans to propose a NATO Arctic mission, Arctic Sentry, modelled on Baltic Sentry.Move aims to undercut Trump’s argument that the US must control Greenland for security.European concern has intensified after recent US military action in Venezuela.Denmark seeks diplomacy to counter what it calls exaggerated US security claims.Trump orders special forces to draft Greenland invasion plan - UK Sunday Daily Mail reportSummary:Daily Mail reports Trump has ordered US special forces to prepare invasion plans for Greenland.Senior US military leaders are resisting the plan, calling it illegal and lacking congressional backing.Advisers led by Stephen Miller are said to be pushing the idea after the Venezuela operation.British diplomats see a possible political motive ahead of US mid-term elections.European officials warn extreme scenarios could fracture NATO.For markets:Escalatory Greenland rhetoric raises geopolitical tail risks in the Arctic region.Any strain on NATO cohesion would be negative for European security confidence.Heightened geopolitical uncertainty typically supports safe-haven assets.FX volatility could rise if US-Europe relations deteriorate.Energy and defence sectors may see increased risk-premium pricing.Trump floats one-year 10% credit-card rate cap, offers zero enforcement detail, just talkSummary:Trump calls for 10% credit-card APR cap for one year, effective Jan 20, 2026.No enforcement detail: unclear if voluntary or government-mandated.Part of a populist “affordability” burst this week (incl. MBS buying idea and ban on institutional home buyers).Big gap to current pricing: Fed data shows 22.30% (Nov 2025) on the key credit-card rate series.Without legislation / clear authority, this looks like headline politics first, policy mechanics later.Looking ahead:Newsquawk Week Ahead: US Earnings, US CPI, US Retail Sales, UK GDP, and China TradeMon: Japanese Holiday (Coming of Age Day); M2 & New Yuan Loans (Dec)Tue: EIA STEO; US NFIB (Dec), CPI (Dec)Wed: NBP Policy Announcement; US PPI (Nov; Oct-cancelled), US Retail Sales (Nov)Thu: UK GDP Estimate (Nov), EZ Trade (Nov), US Export/Import Prices (Dec; Nov-cancelled), NY Fed Mfg survey (Jan), Weekly Claims (w/e 3rd Jan), Chinese House Prices (Dec)Fri: US Industrial Production (Dec) This article was written by Eamonn Sheridan at investinglive.com.

Summary:France warns 2026 budget may be delayed past March electionsConfidence votes next week threaten government survivalPossible National Assembly dissolution if government fallsBudget talks already late amid deficit concernsPolitical uncertainty weighs on fiscal credibilityFrance budget risks delay as confidence votes threaten government stabilityFrance’s fragile fiscal outlook is back in focus after Budget Minister Amélie de Montchalin warned that adoption of the country’s 2026 finance bill could be pushed back until after municipal elections in March if lawmakers topple the government in confidence votes expected next week.Speaking in a televised interview on Sunday, de Montchalin said the collapse of the government would make it “impossible” to pass a budget before the local elections, underscoring the political risks hanging over France’s already-delayed fiscal process. Her comments follow remarks from another cabinet minister suggesting President Emmanuel Macron would dissolve the National Assembly and call snap legislative elections if the government loses a no-confidence vote.France has been operating under heightened political uncertainty since Macron lost his parliamentary majority, forcing the government to rely on fragile alliances and procedural tools to advance legislation. Budget negotiations for 2026 are already running late, against a backdrop of persistent deficits, rising debt servicing costs and growing scrutiny from ratings agencies and EU fiscal authorities.Tensions escalated on Friday after the far-right National Rally and the left-wing France Unbowed jointly called for parliamentary confidence votes tied to opposition to the EU’s Mercosur trade agreement with Latin America. While the trade deal itself is unlikely to be decisive, it has become a political flashpoint for parties seeking to weaken the government.If the government falls, attention would quickly shift to the risk of snap elections, further delaying fiscal decision-making and complicating France’s commitments to rein in deficits under revised EU budget rules. Municipal elections in March already limit lawmakers’ appetite for tough fiscal choices, increasing the likelihood of a prolonged budget vacuum.For markets, the renewed political instability raises concerns about France’s fiscal credibility, with implications for OAT spreads, euro sentiment and broader confidence in Europe’s ability to deliver disciplined budget policy amid slowing growth.Snap election? Given the fractured politics in France it may not resolve anything. This article was written by Eamonn Sheridan at investinglive.com.

Adam had the news on Friday:Japan's Takaichi weighs calling a snap election for mid-FebruaryMore on this, summary:LDP lawmakers expect possible Lower House dissolution in late JanuarySnap election could be held as early as FebruaryTakaichi citing inflation relief and economic impact as prioritiesRuling bloc holds slim Lower House majority, Upper House minorityElection logistics already being quietly preparedSpeculation is building within Japan’s ruling Liberal Democratic Party that Prime Minister Takaichi Sanae could dissolve the Lower House at the start of the ordinary Diet session later this month, potentially triggering a snap general election as early as February.A growing number of LDP lawmakers believe the prime minister is inclined to seek a fresh mandate while cabinet approval ratings remain relatively strong. The ordinary Diet session is scheduled to begin on January 23, a timing that would allow an early or mid-February election if the chamber is dissolved promptly.Asked about the possibility of dissolution, Takaichi said the government’s priority is ensuring households feel the benefits of economic policy and measures aimed at curbing rising prices. She added that the administration is continuing to work on inflation relief and broader economic support, comments widely seen as leaving the election option open.The Takaichi administration currently holds only a slim majority in the Lower House after three independents joined the LDP bloc, while remaining in the minority in the Upper House. That fragile parliamentary arithmetic has added to expectations that the prime minister may move early rather than risk erosion of political momentum.LDP policy chief Kobayashi Takayuki said the authority to dissolve the Lower House rests solely with the prime minister, warning lawmakers they should always be prepared “as if on a battlefield.” Similar language has been echoed across both ruling and opposition parties.Opposition leaders have also begun positioning for an election. Constitutional Democratic Party head Noda Yoshihiko said Takaichi would face scrutiny over whether she is prioritising a political mandate over tackling inflation and economic challenges. Democratic Party for the People leader Tamaki Yuichiro said candidate preparations would be accelerated.Coalition partner Komeito, however, has urged focus on inflation countermeasures rather than political manoeuvring.The Internal Affairs Ministry has already instructed prefectural election boards to prepare for a possible vote. Any final decision may hinge on public opinion, upcoming diplomatic engagements with South Korea and Italy, and the impact a snap election could have on deliberations over the fiscal 2026 budget. ***Takaichi’s objective in calling a near-term election would be to secure a stronger governing mandate. For traders and investors, the more immediate implication is the prospect of even greater fiscal support under her administration. The market read is negative for both JGBs and the yen, given Japan’s already extreme public-debt burden and rising debt-servicing costs as the Bank of Japan gradually edges rates higher. Japanese stocks, however, would welcome more fiscal support for the economy and the weaker yen. The yen weakened last week ahead of Friday’s headlines and has extended those losses since, timing that some in the market may view with raised eyebrows (cough ... insider trading ... cough). This article was written by Eamonn Sheridan at investinglive.com.

The PPI data listed on the calendar from Japan is not due today, its due on Wednesday 14 January 2026.Japanese markets are closed for a holiday today. The data from Australia is not likely to move Oz markets around much at all upon release. This article was written by Eamonn Sheridan at investinglive.com.

As is usual for a Monday morning, market liquidity is very thin until it improves as more Asian centres come online ... prices are liable to swing around, so take care out there.EUR/USD 1.1635USD/JPY 158.09GBP/USD 1.3398USD/CHF 0.8011USD/CAD 1.3911AUD/USD 0.6681NZD/USD 0.5731Not too much movement from Later Friday levels. We've had some news over the weekend, nothing to concrete in terms of actual implementation though. I'll be back with further updates soon. Europe moves to boost NATO Arctic presence to counter Trump’s Greenland rhetoric/threatSummary:UK and Germany are leading talks on boosting European and NATO military presence in Greenland.Germany plans to propose a NATO Arctic mission, Arctic Sentry, modelled on Baltic Sentry.Move aims to undercut Trump’s argument that the US must control Greenland for security.European concern has intensified after recent US military action in Venezuela.Denmark seeks diplomacy to counter what it calls exaggerated US security claims.Trump orders special forces to draft Greenland invasion plan - UK Sunday Daily Mail reportSummary:Daily Mail reports Trump has ordered US special forces to prepare invasion plans for Greenland.Senior US military leaders are resisting the plan, calling it illegal and lacking congressional backing.Advisers led by Stephen Miller are said to be pushing the idea after the Venezuela operation.British diplomats see a possible political motive ahead of US mid-term elections.European officials warn extreme scenarios could fracture NATO.For markets:Escalatory Greenland rhetoric raises geopolitical tail risks in the Arctic region.Any strain on NATO cohesion would be negative for European security confidence.Heightened geopolitical uncertainty typically supports safe-haven assets.FX volatility could rise if US-Europe relations deteriorate.Energy and defence sectors may see increased risk-premium pricing.Trump floats one-year 10% credit-card rate cap, offers zero enforcement detail, just talkSummary:Trump calls for 10% credit-card APR cap for one year, effective Jan 20, 2026.No enforcement detail: unclear if voluntary or government-mandated.Part of a populist “affordability” burst this week (incl. MBS buying idea and ban on institutional home buyers).Big gap to current pricing: Fed data shows 22.30% (Nov 2025) on the key credit-card rate series.Without legislation / clear authority, this looks like headline politics first, policy mechanics later.Looking ahead:Newsquawk Week Ahead: US Earnings, US CPI, US Retail Sales, UK GDP, and China TradeMon: Japanese Holiday (Coming of Age Day); M2 & New Yuan Loans (Dec)Tue: EIA STEO; US NFIB (Dec), CPI (Dec)Wed: NBP Policy Announcement; US PPI (Nov; Oct-cancelled), US Retail Sales (Nov)Thu: UK GDP Estimate (Nov), EZ Trade (Nov), US Export/Import Prices (Dec; Nov-cancelled), NY Fed Mfg survey (Jan), Weekly Claims (w/e 3rd Jan), Chinese House Prices (Dec)Fri: US Industrial Production (Dec) This article was written by Eamonn Sheridan at investinglive.com.

Summary:UK and Germany are leading talks on boosting European and NATO military presence in Greenland.Germany plans to propose a NATO Arctic mission, Arctic Sentry, modelled on Baltic Sentry.Move aims to undercut Trump’s argument that the US must control Greenland for security.European concern has intensified after recent US military action in Venezuela.Denmark seeks diplomacy to counter what it calls exaggerated US security claims.European powers led by the UK and Germany are discussing plans to expand their military presence in Greenland and the wider Arctic, aiming to demonstrate that Europe and NATO already have regional security under control and to blunt renewed rhetoric from Donald Trump about US ownership of the island, Bloomberg (gated) reported.Germany is preparing to propose a joint NATO Arctic mission, informally dubbed Arctic Sentry, modelled on the alliance’s Baltic Sentry operation, according to people familiar with the discussions. The move would signal a stronger allied footprint in the High North amid rising concern over Russia and China’s Arctic ambitions.The push follows Trump’s repeated claims that the US must control Greenland to prevent Russian or Chinese encroachment, assertions rejected by Nordic governments. European leaders are increasingly alarmed by the president’s recent rhetoric and actions, including a US raid to capture Venezuela’s leader, which has sharpened fears about Washington’s willingness to use force to achieve foreign-policy goals.UK Prime Minister Keir Starmer has urged allies to increase their security presence in the Arctic and has held talks with French President Emmanuel Macron and German Chancellor Friedrich Merz. Starmer has also spoken directly with Trump, stressing the need to deter an increasingly aggressive Russia in the region.Germany’s foreign minister, Johann Wadephul, is set to raise Greenland and NATO’s role in Arctic stability during talks with US Secretary of State Marco Rubio this week. Denmark, meanwhile, hopes an imminent diplomatic visit to Washington can temper tensions and correct what it says are exaggerated security claims.While Trump has said he prefers to “make a deal” to acquire Greenland, he has not ruled out the use of force. Rubio has since told lawmakers that Washington’s aim remains a purchase rather than military intervention — an assurance closely watched by European capitals wary of strain on NATO unity. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Daily Mail reports Trump has ordered US special forces to prepare invasion plans for Greenland.Senior US military leaders are resisting the plan, calling it illegal and lacking congressional backing.Advisers led by Stephen Miller are said to be pushing the idea after the Venezuela operation.British diplomats see a possible political motive ahead of US mid-term elections.European officials warn extreme scenarios could fracture NATO.For markets:Escalatory Greenland rhetoric raises geopolitical tail risks in the Arctic region.Any strain on NATO cohesion would be negative for European security confidence.Heightened geopolitical uncertainty typically supports safe-haven assets.FX volatility could rise if US-Europe relations deteriorate.Energy and defence sectors may see increased risk-premium pricing. The UK's Sunday Daily Mail reported that US President Donald Trump has instructed his top special forces commanders to draw up contingency plans for the invasion of Greenland, a move that senior US military leaders are reportedly resisting. According to sources cited by The Mail on Sunday, advisers close to Trump, particularly political strategist Stephen Miller, have been emboldened by the recent operation to capture Venezuela’s leader Nicolás Maduro, and want to act quickly to seize the Arctic island before Russia or China can make a move.British diplomatic sources believe Trump may also be driven by domestic political motives, hoping a dramatic foreign-policy action could distract American voters from weak economic performance ahead of this year’s mid-term elections. However, the plan has alarmed senior military figures, with the Joint Chiefs of Staff reportedly pushing back on the grounds that an invasion would be illegal and lack congressional support.One insider told the paper that generals are attempting to divert Trump’s focus toward “less controversial measures,” such as countering alleged Russian “ghost ships” or a potential strike on Iran, likening the effort to dealing with “a five-year-old.”Diplomats have reportedly war-gamed a range of scenarios, from “escalatory” use of force or coercion to sever Greenland’s ties with Denmark, to a “compromise scenario” in which Denmark grants the US expanded military access while formally barring Russia and China. A diplomatic cable cited by The Mail warned the most extreme scenario could “lead to the destruction of NATO from the inside.”According to the cable, hardline figures around Trump may see occupying Greenland as a way to force European NATO members into abandoning the alliance, since Congress would not allow the president to unilaterally withdraw the United States from NATO. Under the compromise approach, Denmark would let the US expand legal military rights on the island — rights it already enjoys in practice — potentially aligning Greenland with Washington’s strategic goals.European officials reportedly believe the window for action is narrowing ahead of the mid-term elections, and have pointed to the upcoming NATO summit as a possible moment to cement a deal. A diplomatic source told the Daily Mail that British positioning will be key, noting that UK support for Europe could shape how allies respond to Trump’s proposals. Generals, meanwhile, are said to consider Trump’s Greenland plan “crazy and illegal” and are trying to distract him with other military priorities. This article was written by Eamonn Sheridan at investinglive.com.

Mon: Japanese Holiday (Coming of Age Day); M2 & New Yuan Loans (Dec)Tue: EIA STEO; US NFIB (Dec), CPI (Dec)Wed: NBP Policy Announcement; US PPI (Nov; Oct-cancelled), US Retail Sales (Nov)Thu: UK GDP Estimate (Nov), EZ Trade (Nov), US Export/Import Prices (Dec; Nov-cancelled), NY Fed Mfg survey (Jan), Weekly Claims (w/e 3rd Jan), Chinese House Prices (Dec)Fri: US Industrial Production (Dec)US Earnings Season:Writing at the end of Q4, FactSet said the earnings season is expected to show continued, albeit moderating, growth. S&P 500 earnings are forecast to rise 8.3% Y/Y, marking a tenth straight quarter of expansion, while revenues are seen up 7.6% Y/Y, among the strongest growth rates since 2022. Estimates have been revised higher through the quarter, an atypical pattern reflecting firmer demand and less negative corporate guidance. Technology is expected to lead earnings and revenue growth, driven by semiconductors and software, with Materials also among the stronger performers. Communication Services and Health Care are forecast to post solid revenue growth. By contrast, Consumer Discretionary is expected to deliver the weakest earnings performance, weighed down by sharp declines in automobiles and household durables, while Energy revenues are projected to fall due to lower oil prices. Financials will begin reporting next week, and earnings growth expectations for the sector have improved modestly. Large banks are likely to point to stable credit quality, resilient net interest income and continued strength in capital markets activity, with insurers and brokers also contributing positively to sector results, FactSet said. In the week, numbers are due from banks including JPM, BK, BAC, WFC, C, BLK, GS, MS.US CPI (Tue):Wells Fargo expects US CPI to rebound on a monthly basis in December after November’s unusually soft reading, with headline CPI seen rising 0.35% M/M and core CPI 0.36% M/M. It expects the annual rates to hold at 2.7% Y/Y for headline inflation and 2.8% Y/Y for core, remaining below September levels and signalling a continued disinflationary trend. Wells said the December pickup largely reflects the unwinding of distortions from data-collection disruptions during the government shutdown, which amplified seasonal discounting in November. Goods prices are expected to rebound more sharply than services on holiday discount payback, while tariff pass-through appears to be moderating. Services inflation should also firm, notably in travel-related categories, while shelter inflation is seen following its pre-shutdown trend. Statistical quirks persist, particularly in housing, where CPI sampling rotations mean shutdown-related softness in shelter inflation may linger until April. Health and motor vehicle insurance prices are also expected to restrain CPI in the coming months. Among other inflation gauges, the New York Fed’s monthly survey of consumer expectations rose in December, with consumers expecting 3.4% price growth over the next year, up from 3.2% in November, while longer-term expectations were steady. In December, ISM data, manufacturing prices remained in expansion, matching November, while the services prices index fell to its lowest since March 2025, though it has still exceeded 60 for 13 straight months. Looking ahead, Wells sees inflation continuing to ease, supporting a patient Fed stance.Chinese Trade Balance (Wed): China’s December trade data are expected to cap a historically strong year after the trade surplus surpassed USD 1tn by November, underpinned by resilient exports and softer imports. Analysts at ING expect export growth to slow modestly to about 3.0% Y/Y in December, from 5.9% in November, reflecting earlier front-loading, while imports are seen rising about 1.6% Y/Y, versus 1.9% previously. ING forecasts a December surplus of about USD 118.9bn, taking the full-year 2025 surplus close to USD 1.2tn.US Retail Sales (Wed):The November retail sales data are due on Wednesday. Bank of America’s monthly consumer checkpoint data showed seasonally adjusted spending growth per household was flat M/M, while the annual rate of total credit and debit card spending per household slowed to 1.3% Y/Y, which the bank said points to solid growth but at a less robust pace than in October. Holiday item spending was strong in October and November but slowed around Black Friday and Cyber Monday, according to the data, suggesting some consumers shopped earlier for deals. The bank said consumer finances appear healthy, with little reliance on credit or buy now, pay later, although card data showed a small but rising BNPL share. It added that large gaps persist between higher- and lower-income households in spending and wage growth, with higher-income households lifting spending by 2.6% Y/Y, while lower-income groups lagged with a gain of just 0.6% Y/Y. After-tax wage growth edged up to 4% Y/Y for higher-income households and to 1.4% Y/Y for lower-income households.UK GDP (Wed):The November print follows on from a softer than expected October series, which saw the economy begin Q4 in contractionary territory at -0.1% M/M vs a 0.1% Q/Q Q3 print. A release that weighed on Sterling at the time. For Q4, the BoE expects zero growth in headline GDP, as per the December statement; note, a fuller assessment of the economy accounting for the November Budget will be provided by the BoE in the February MPR. In the context of this, the data may well be looked through to a degree, as the economy’s performance was subject to uncertainty in the pre-budget window. A point highlighted by the S&P PMI series at the time, “Survey respondents widely commented on business challenges linked to fragile client confidence, heightened risk aversion and elevated policy uncertainty in the run-up to the Budget. Many firms noted that major spending decisions had been delayed, while some also cited long-term growth headwinds from subdued investment spending”.This article originally appeared on Newsquawk. This article was written by Newsquawk Analysis at investinglive.com.

Summary:Trump calls for 10% credit-card APR cap for one year, effective Jan 20, 2026. No enforcement detail: unclear if voluntary or government-mandated. Part of a populist “affordability” burst this week (incl. MBS buying idea and ban on institutional home buyers). Big gap to current pricing: Fed data shows 22.30% (Nov 2025) on the key credit-card rate series. Without legislation / clear authority, this looks like headline politics first, policy mechanics later.President Donald Trump has called for a one-year cap of 10% on US credit-card interest rates, saying consumers are being “ripped off” and framing the move as an “affordability” push. The proposal would start January 20, 2026, the first anniversary of his return to the White House, but Trump provided no detail on the mechanism, leaving open whether he expects voluntary compliance from issuers or is signalling some form of government enforcement. The lack of detail matters, because credit-card pricing is not something a president can simply “announce” into existence. In practice, a hard cap would typically require Congressional legislation and/or actions through the US regulatory framework. Yet the main federal watchdog for card practices, the Consumer Financial Protection Bureau (CFPB), has been a long-running target of conservatives, and the Trump administration has pursued steps that would reduce or constrain its reach. What Trump is doing, clearly, is leaning into a string of populist, social-media-first affordability declarations this week, high on punchy intent, low on executable detail. In the days prior he posted about ordering “his representatives” to buy mortgage bonds to push borrowing costs lower, and about banning institutional investors from buying single-family homes. Together, the sequence reads as an attempt to reclaim the cost-of-living narrative with simple targets (banks, Wall Street, institutions) and headline-friendly numbers (10%). This all, of course, in an election year (mid-terms) with Trump's popularity continuing to make new lows and therefore threatening the Republican majorities in Congress. I posted earlier in the week that I expect populist announcements and an eventual hit to the US dollar (not yet though, the dollar higher on Friday: investingLive Americas market news wrap: Nonfarm payrolls a touch soft, no tariff decision)On the numbers, the policy would be a dramatic cut versus prevailing rates: the Federal Reserve’s series for commercial bank credit-card interest (accounts assessed interest) shows ~22.30% in late 2025. That gap underscores why markets and issuers will focus on “how” rather than “what”, and why, without a clear legislative pathway, the announcement looks more like political signalling than an immediately actionable policy shift. Congressional interest in caps is real and notably bipartisan, past proposals have sought a 10% ceiling, but they have not become law. Until a bill advances (or a credible regulatory/administrative route is spelled out), the most likely near-term impact is messaging and volatility in related headlines, rather than an instant repricing of consumer credit. This article was written by Eamonn Sheridan at investinglive.com.