The euro is stealing the show this morning, reaching its highest level in three years against the greenback as markets are taking a positive view of progress made in talks to form a coalition government in Germany. However, these celebrations could be premature, as official talks between the three parties, including Chancellor Angela Merkel’s Christian Democrats, must first be approved in a vote on Jan. 21.
Meanwhile in China, trade balance numbers are raising eyebrows, with a December trade surplus of $54.7 billion, the country’s best performance since January 2016. With exports up 10.8% compared to growth of 4.5% in imports, it is highly likely that these results will once again draw the ire of President Donald Trump. Keep an eye on his tweets.
Closer to home, the United States will release inflation data and Retail Sales figures this morning. The main issue is getting a reliable sense of the inflation picture so as to be able to anticipate future actions by the U.S. Federal Reserve.
Stéphane Goulet
Range of the day: 1.2460 – 1.2600