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Market Insight 30-01-2026

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  • Market Insight 30-01-2026

Daily Currency Market Update – 30 January 2026

Market Overview

The US Dollar staged a sharp rebound early Friday as markets braced for President Trump’s imminent announcement of the next Federal Reserve Chair, with former Fed Governor Kevin Warsh widely reported as the frontrunner. A WSJ report that the White House and Senate Democrats reached a deal to avert a government shutdown also helped stabilise sentiment.

Despite the bounce, the Dollar remains on track for a second consecutive weekly decline, weighed down by concerns over Fed independence, erratic US trade policy, and geopolitical tensions. Trump’s threats of 50% tariffs on Canadian aircraft, new sanctions on oil suppliers to Cuba, and escalating rhetoric toward Iran kept markets cautious.

Attention now turns to Trump’s Fed Chair nomination and the US Producer Price Index (PPI) for the next directional cue. Eurozone and German Q4 GDP data will also be closely watched.

GBP/EUR

GBP/EUR trades flat near 1.1530, with both currencies consolidating ahead of key Eurozone data.

Key drivers:

  • ECB officials warned that Euro strength could force a policy response if it drags inflation lower.
  • Kocher and Villeroy emphasised that the ECB is “closely monitoring” EUR appreciation.
  • Rate‑cut expectations for September have risen modestly to ~26%.
  • Eurozone sentiment indicators improved:
    • Economic Sentiment Index: 99.4
    • Business Climate: –0.41
    • Consumer Confidence: –12.4
  • UK markets remain cautious ahead of the 5 February BoE meeting, with rates expected to remain at 3.75%.

Outlook: GBP/EUR likely to remain range‑bound until Eurozone GDP and unemployment data are released.

GBP/USD

GBP/USD softens to ~1.3760, pressured by the Dollar’s recovery.

Drivers:

  • The US Senate advanced a spending deal to avert a shutdown, lifting the Dollar.
  • Markets await Trump’s Fed Chair announcement, with Warsh seen as the likely nominee.
  • Analysts suggest a Warsh appointment could reassure markets about Fed independence.
  • The BoE is expected to hold rates at 3.75% next week, with the next cut likely in April or June.

Outlook: GBP/USD direction hinges on Trump’s Fed pick and US PPI data later today.

EUR/USD

EUR/USD trades near 1.1965, recovering modestly but still under pressure.

Key factors:

  • USD demand improved as shutdown fears eased and markets awaited Trump’s Fed Chair announcement.
  • Concerns over US trade policy and Fed independence continue to weigh on the Dollar longer‑term.
  • Eurozone and German Q4 GDP data, along with German CPI, will be key for EUR direction.
  • ECB expected to keep rates unchanged through mid‑2026.

Outlook: EUR/USD remains sensitive to US political headlines and Eurozone data surprises.

AUD/USD

AUD/USD retreats toward 0.7030, pulling back from three‑year highs.

Supportive factors:

  • Australia’s PPI held at 3.5% y/y, consistent with Q3.
  • Markets now price a 70%+ probability of an RBA hike next week.
  • Export prices rose 3.2% q/q, reinforcing Australia’s improving trade backdrop.

Headwinds:

  • USD strengthened after Bessent reaffirmed the US “strong dollar” policy.
  • Profit‑taking ahead of the RBA meeting weighed on AUD.

Outlook: AUD/USD remains supported by domestic fundamentals; a break back above 0.7100 depends on USD sentiment.

USD/CAD

USD/CAD rebounds to ~1.3520, supported by renewed USD demand.

Drivers:

  • Trump threatened 50% tariffs on Canadian aircraft, adding uncertainty for CAD.
  • Shutdown‑averting deal lifted the Dollar.
  • Oil prices remain elevated on geopolitical risks and strong Chinese demand.
  • Markets await Trump’s Fed Chair pick and US PPI data.

Outlook: USD/CAD may remain volatile; broader USD sentiment and trade headlines will dominate.

USD/CHF

USD/CHF rises to ~0.7685, recovering from multi‑year lows.

Key points:

  • USD demand improved after the shutdown deal and ahead of Trump’s Fed nomination.
  • Safe‑haven CHF remains supported by geopolitical tensions and concerns over US policy stability.
  • SNB’s Schlegel warned that further CHF appreciation could pressure the central bank but ruled out negative rates.

Outlook: USD/CHF remains vulnerable to renewed risk aversion or political uncertainty.

Final Summary

The Dollar rebounded as markets awaited Trump’s Fed Chair announcement and a shutdown deal eased immediate risks. Sterling and the Euro consolidated ahead of key data, while the Australian Dollar corrected after a strong run. CAD softened on renewed trade tensions, and CHF remained firm despite a modest USD recovery. Today’s focus turns to US PPI, Eurozone GDP, and Trump’s Fed nomination.