The USD closed marginally higher yesterday after being down nearly 0.4% overnight, buoyed by strong domestic data and commentary from Trump. US job openings rose to a 6-month high, and a price gauge of US services hit the highest level since early 2023. US 10-year Treasury yields rose nearly 6 basis points, and implied swap odds saw investors shift to fully price in the first Fed rate cut of 2025 in July instead of June.

US rates are higher today, and the USD is up 0.45%, stoked by a report overnight from CNN that Trump is considering a national emergency declaration to implement a program for universal tariffs. ADP employment data showed 122k job additions in December, missing the 140k median forecast. Speaking this morning, the Fed’s Waller indicated his support for further rate cuts this year.

“As always, the extent of further easing will depend on what the data tell us about progress toward 2% inflation, but my bottom-line message is that I believe more cuts will be appropriate,” Waller said, adding that he doesn’t expect tariffs to have a significant impact on monetary policy.

The Fed’s meeting minutes from the December decision are released at 2 pm. Nonfarm payroll data comes on Friday.

EUR/USD fell nearly 0.5% yesterday and is about 0.5% lower today, trading 0.8% lower than this time last week. Yesterday’s inflation metrics met expectations as the monthly metric accelerated 0.4% in November. The ECB’s yearly CPI estimate increased in November to 2.4% from 2.2% previously. German retail sales data was notably weak, and factory orders declined the most in 3 months. The ECB’s Villeroy speaks this afternoon.

GBP/USD fell 0.35% yesterday and has seen a sharp move lower today (-1.2%) after a surge in borrowing costs pushed 10-year yields to the highest level since 2008. Typically, higher rates boost a currency’s appeal, but this move (rates up, GBP lower) indicates fiscal un-anchoring. Investors are now fully pricing just one 25 basis-point cut this year. The week started with 2 fully priced rate reductions and nearly 50% odds of a third in 2025. December inflation data comes next Wednesday.

USD/CAD rose 0.25% yesterday and is about 0.25% higher today, trading marginally higher than this time last week. Yesterday’s November trade data beat expectations as the trade deficit narrowed, including a revision to a smaller deficit in October. November trade saw both Canada’s trade surplus with the US and its trade deficit with the rest of the world widen. Friday’s employment data is the next key economic release.