The Morning Update

Markets open with the USD flat, oil prices lower, equities higher, and bond yields easing. CPI confirmed further progress on inflation, PPI undershot expectations, and retail sales came in weaker, reinforcing expectations for easing inflation pressures and supporting the case for lower yields. Weekly initial jobless claims, along with the Empire State and Philly Fed manufacturing indices, are due later today, providing fresh insight into US labor market conditions and economic momentum.

News Headlines. Denmark’s foreign minister said the US and Denmark have a “fundamental disagreement” over Greenland, calling President Trump’s push to acquire the island “totally unacceptable,” despite frank but constructive talks in Washington. European countries including France and Germany are deploying troops to Greenland to boost security amid disagreements with the Trump administration. Ukraine declared an energy emergency in Kyiv after Russian strikes cut power during extreme cold, as President Zelensky accused Moscow of exploiting winter conditions.

In currency markets.  Yesterday’s data showed China posting a record ~$1.2 trillion trade surplus in 2025, supporting calls for a stronger yuan, though policymakers are likely to cap appreciation. THB is holding steady after recent gains against the USD, while MYR stays supported but faces resistance near key levels as broader Asian FX reacts to dollar strength and monetary policy expectations. The AUD is up 0.25%, while the NZD is also slightly firmer, trading 0.03% higher, as risk sentiment stabilises and both currencies recover modestly from recent losses. The ZAR is up 0.18% against the dollar on gold support, while the MXN remains firm (up 0.05%) in the high-17s a midrange-bound trading.

In commodity markets. Oil prices fell nearly $3 a barrel after President Trump said he was told that Iran had halted execution plans, easing immediate geopolitical concerns despite Tehran’scontinued crackdown on protesters. The US completed its first $500m sale of Venezuelan oil, with more expected, as President Trump moves to tap the country’s energy reserves. Venezuelan crude is being sold at a discount to competing supplies. Gold (-0.2%) and silver (-2.2%) slipped on Thursday as investors took profits after a run of record highs, while a softer tone from President Trump on the Fed and Iran reduced near-term safe-haven demand. Agricultural commodities are broadly higher, with soybeans up 0.3%, wheat gaining 0.6%, and lumber rising 1.7%.

USD/CAD traded higher on Thursday, supported by strong US data and a weaker Canadian dollar as falling oil prices weighed on the loonie. The pair extended its rebound from weekly lows, with firm producer prices and stronger retail sales reinforcing expectations that the Fed will keep policy unchanged in the near term.

EUR/CAD may see volatility on Eurozone data releases,while oil price moves remain key for the Canadian dollar.

EUR/USD edged higher from session lows on stronger Eurozone industrial production but remains near one-month lows as firm US data continues to support the dollar.

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GBP/EUR remained stable despite the UK GDP surprised to the upside in November, supporting the pound. The euro remains under pressure, with upcoming Eurozone data unlikely to reverse its bearish momentum without a strong upside surprise.

GBP/USD edged lower against the dollar as strong UK GDP failed to shift rate expectations, with BoE cuts still priced in and firm US data supporting the greenback.

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