Market Information

• The Canadian Dollar found fresh footing on Tuesday, keeping USD/CAD bids below 1.3700.

The January BoK MPC minutes reveal a shift towards a more hawkish stance, indicating increased market sensitivity to potential tightening. Despite mixed signals, including a lower USD/KRW and rising property prices, the current data does not decisively sway the Committee's views.

The Reserve Bank of Australia (RBA) raised its interest rate by 25 basis points to 3.85%, aligning with market expectations. The RBA's hawkish tone indicates that inflation pressures are likely to persist, suggesting further policy tightening may be on the horizon.

TD Securities' report by Alex Loo discusses the outlook for the Chinese Yuan (CNY) in 2026. The report highlights that while the CNY is significantly undervalued, expectations for a sizable revaluation may be misplaced.

Silver (XAG/USD) rebounds sharply on Tuesday and trades around $85.30, up roughly 6.50% on the day at the time of writing.

The Australian Dollar (AUD) trades on the front foot against the US Dollar (USD) on Tuesday, after the Reserve Bank of Australia (RBA) delivered a widely expected interest rate hike, lifting the Aussie broadly across the board.

The Japanese Yen (JPY) experienced significant volatility at the start of 2026, trading between 153 and 159 before finishing the month slightly stronger.

• Walmart becomes the first retailer to reach $1 trillion market capitalization, joining an elite club dominated by tech giants.

Standard Chartered's report indicates that China's Producer Price Index (PPI) deflation likely eased to 1.5% year-on-year in January, driven by month-on-month increases in metal and energy prices.

NZD/USD recovers and trades around 0.6050 on Tuesday at the time of writing, up 0.75% on the day, after two consecutive days of decline. The rebound mainly reflects a pause in the appreciation of the US Dollar (USD), which is giving back part of its recent gains against major currencies.

Societe Generale analyst Kunal Kundu notes that the US will reduce its tariffs on Indian goods to 18% from 50%, while India is expected to eliminate tariffs on US goods. However, India has not confirmed the zero-tariff access or the cessation of Russian oil purchases.

BNP Paribas projects that Germany will experience a return to robust growth in 2026, following a modest recovery in 2025. The report emphasizes that infrastructure spending approved for 2026 will facilitate this growth, despite previous delays.

The recent de-escalation of trade tensions between Canada and China is expected to provide relief for Canadian agricultural exporters, particularly in the Prairies and coastal regions.

The British Pound (GBP) trades in a tight range against the US Dollar (USD) on Tuesday, with GBP/USD struggling to find direction as a thin economic calendar in both the United States (US) and the United Kingdom (UK) keeps price action subdued.

National Bank of Canada (NAB) analysts Stéfane Marion and Kyle Dahms noted that the USD fell to its lowest level since 2023 due to geopolitical tensions and speculative positioning.

EUR/JPY trades around 183.80 on Tuesday at the time of writing, up 0.20% on the day, amid contrasting dynamics between Europe and Japan.

The Reserve Bank of Australia (RBA) has raised its key interest rate by 25 basis points to 3.85%, aligning with market expectations. The RBA's hawkish tone indicates that inflation pressures are likely to persist, suggesting further policy tightening may be on the horizon.

Federal Reserve (Fed) President of the Bank of Richmond Thomas Barkin said on Tuesday that he is still concerned about risks to employment and inflation data and that he hopes the current United States (US) government shutdown will only cause a few days of delay in data.

The CAD is holding in a tight range in the upper 1.36s, trading close to its fair value, as noted by Scotiabank's Analyst Team. The report indicates that recent swings in markets have prompted a rebound in the fair value estimate for the CAD, which now stands at 1.3679.

West Texas Intermediate (WTI) Crude Oil stages a technical rebound on Tuesday, as buyers step in ahead of the $60 psychological level. At the time of writing, WTI is trading around $62.45 per barrel, up about 0.70% on the day after reversing its earlier intraday losses.

TD Securities Senior European & UK Rates Strategist Pooja Kumra reports that GBP spreads are continuing to richen across the curve, particularly in the belly, with 5-year spreads increasing by nearly 10bps since the start of the year.

Deutsche Bank's Macro Strategy report highlights a positive outlook for the Dollar following strong economic data. The report notes that the ISM manufacturing index unexpectedly surged, contributing to rising optimism for 2026.

EUR/GBP trades with caution around 0.8630 on Tuesday at the time of writing, hovering near its five-month low.

Gold (XAU/USD) consolidates its gains during the American session on Tuesday after surging more than 5% earlier in the day, as dip buyers step back into the market following last week’s violent correction from record highs near $5,600.

OCBC Bank analysts Sim Moh Siong and Christopher Wong report that Gold prices have shown tentative signs of stabilization after a sharp decline from above USD5,500/oz to a low of USD4,402/oz.

Remarks from Federal Reserve (Fed) Bank of Richmond President Thomas Barkin underline the economy’s resilience even as inflation remains above target. Barkin notes that, to date, rate cuts are framed as insurance for the labour market while the Fed works through the final phase of disinflation.

The British Pound (GBP) strengthens against the Japanese Yen (JPY) on Tuesday, as the Yen remains under broad pressure amid market concerns over Prime Minister Sanae Takaichi’s expansionary fiscal stance. At the time of writing, GBP/JPY is trading near 213.26, rising for a third straight day.

Commerzbank Research Team notes a significant decline in Oil prices, with Brent trading down over USD 4 from last week's close. The report attributes the drop to geopolitical tensions and production adjustments from OPEC+.

Remarks from Federal Reserve Governor Stephen Miran lean decisively dovish, challenging the idea that current policy settings remain appropriate. The focus is on subdued underlying inflation, limited pressure from market yields, and scope for sizeable rate cuts this year.

Kevin Warsh has been nominated by President Trump to be the next Fed chair, but his confirmation process may be complicated. Warsh's past as a hawk has shifted towards a more dovish stance in recent years.

Rabobank analysts, Molly Schwartz and Christian Lawrence, anticipate that Banxico will hold the policy rate at 7.00% during the February 5 meeting. This expectation is shared unanimously among Bloomberg surveyed analysts.

Brown Brothers Harriman (BBH) analysts report that the Reserve Bank of Australia (RBA) has raised the cash rate target by 25bps to 3.85%, marking the first increase since 2023. This decision was largely anticipated by the market, with inflation expected to remain above target for some time.

BNP Paribas highlights a positive outlook for the Eurozone, forecasting robust GDP growth of 1.5% in 2026, bolstered by recovering industry and household purchasing intentions. The report notes that Europe is overcoming challenges such as the war in Ukraine and political uncertainty in France.

DBS Group Research report, authored by Radhika Rao, notes that the US and India have agreed on a trade deal, reducing tariffs on Indian goods from 25% to 18%. This agreement is contingent on India's continued reduction of oil purchases from Russia.

The USD/JPY extends its winning streak for the third trading day on Tuesday, trades 0.24% higher to near 156.00 during the European trading session.

TD Securities discusses the Eurozone's inflation expectations ahead of key economic data releases. The report anticipates a dip in headline inflation to 1.7% y/y, which is aligned with previous forecasts. The ECB views this as a temporary deviation, suggesting no immediate monetary policy shifts.

Rabobank's RaboResearch Team has noted a rally in European gas prices, which reached €43/MWh due to below-average storage levels and severe cold weather.

USD/CHF trades lower around 0.7780 on Tuesday, down 0.15% on the day at the time of writing. The pair remains under pressure as political uncertainty in the United States (US) weighs on the US Dollar (USD), despite the release of encouraging economic indicators.

The AUD/USD pair trades almost 1% higher, slightly above 0.7000, during the European trading session on Tuesday. The Aussie pair demonstrates significant strength as the Australian Dollar (AUD) outperforms its peers, following the Reserve Bank of Australia’s (RBA) monetary policy announcement.

The Canadian Dollar (CAD) started 2026 at its strongest level against the USD since 2024, driven by rising commodity prices and a reversal in speculative positioning.

The US Dollar (USD) has rebounded at the start of the week, bolstered by President Trump's nomination of Kevin Warsh for Fed Chair and positive economic indicators.

The Deutsche Bank report highlights that the Australian Dollar gained strength after the RBA raised its benchmark cash target rate by 25 basis points to 3.85%.

Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $86.81 per troy ounce, up 8.58% from the $79.95 it cost on Monday.

The US Dollar Index (DXY) is trimming gains on Tuesday, trading at 97.45 at the time of writing after failing to extend gains past a previous support level, now turned resistance, at the 97.75 area.

The Japanese Yen has come under renewed pressure, with USD/JPY trading at 155.50. The lack of concrete follow-up to verbal interventions and political statements regarding a weak currency have contributed to this weakness.

Dow Jones futures rose 0.12% to around 49,580 in the European session on Tuesday, while S&P 500 and Nasdaq 100 futures climbed 0.27% and 0.57% to near 7,020 and 26,000, respectively. Investors now look ahead to a busy earnings slate later in the day, including results from AMD, Pfizer, and Chipotle.

Gold (XAU/USD) rallies back closer to the $4,950 level during the first half of the European session on Tuesday amid some follow-through short-covering after two days of heavy liquidation.

The GBP is showing modest gains against the USD, outperforming G10 peers as markets prepare for the upcoming BoE meeting. Recent UK data has reduced expectations for easing, with a 25bps cut now priced in by June, note Shaun Osborne and Eric Theoret from Scotiabank.

Rabobank's RaboResearch Team has raised its 2026 Brent forecasts to $64/bbl from $58.25/bbl due to geopolitical tensions. WTI is now expected to average $59.80/bbl, up from $54.60/bbl.

The Euro (EUR) edges higher against the US Dollar (USD) on Tuesday, trading at 1.1815 at the time of writing after bottoming at 1.1776 the previous day.