Trump Tariff Uncertainty Drives Currency Roller Coaster By Vicky Ge Huang

Currency markets have gyrated during the first days of the new Trump administration with little sign of a clear direction. Traders are betting on more rapid swings in coming months. And at the World Economic Forum in Davos, Switzerland, European Central Bank leader Christine Lagarde said U.S. and European policymakers are dealing with very different economic backdrops and monetary policy might diverge between the two.

Top News Traders Bet on More Rapid Currency Swings in Coming Months

On Inauguration Day, the U.S. dollar fell by 1% against a basket of foreign currencies following a Wall Street Journal report suggesting that no tariffs would land on day one. In the evening, the greenback rebounded after President Trump threatened new 25% tariffs on Canada and Mexico as soon as Feb. 1-but it gave back those gains again on Tuesday. The threat against Canada and Mexico came as currency markets were already struggling to price how fast the Federal Reserve will keep cutting interest rates.

Trudeau Promises 'Robust' Response After Trump's Tariff Pledge How a Trump Trade War Puts Cheap Oil From Canada at Risk ECB, Fed Led by Differing Economic Fortunes, Lagarde Says

The process of lower inflation is now secure in the 20-member eurozone after a couple of years of very rapid price rises, and isn't at risk of being driven higher by a possible inflation spike in the U.S., ECB chief Christine Lagarde told CNBC on the sidelines of the World Economic Forum.

While the U.S. is growing robustly, the risk in Europe is for the economy to lag expectations, she said. "We do have that divergence [in monetary policy] that has to do with a different economic setting at the moment, between the U.S. and Europe," Lagarde said. (Dow Jones Newswires)

Davos Reaction to Trump 2.0: Buckled Up and Ready for His New Term

After nearly a decade, you really get to know somebody. So the global elite, gathered for the World Economic Forum in the Swiss Alps, say they are buckled up and ready for President Trump's second term.

Crypto Thought Trump Would Bring It Legitimacy. Then He Launched a Meme Coin.

The crypto industry eagerly awaited Donald Trump's return to the White House. Now, it's reeling after the president and first lady launched a pair of meme coins .

U.S. Economy Biden Leaves With an Uncertain Economic Legacy. Not So in This Indiana Town.

The mayor of Terre Haute, Ind., is tracking so many infrastructure investments that he is running out of room on his whiteboard. There are new parks, sidewalks and housing units under construction. A giant factory is rising south of town and another is on the way.

The growth is some of the best this region has experienced in decades, much of it sparked by federal funding from President Biden-backed legislation.

Financial Regulation Pension Funds Want Private Equity to Open Up About Fees, Returns

A group of U.S. pensions and other institutions is pushing private-equity firms to share more information on their fees and investment returns, in a bid to address simmering frustration with the industry's disclosures.

SEC's 'CryptoMom' Tasked With Overhauling Digital-Assets Approach

The acting chair of the Securities and Exchange Commission named Republican commissioner Hester Peirce as the head of a new cryptocurrency task force , the first step in an expected about-turn by the regulator on crypto.

Coinbase Would Delist Stablecoin Tether if Required by Law: CEO

Coinbase Global would remove stablecoin tether from its U.S. cryptocurrency trading platform if required by new legislation, CEO Brian Armstrong said in an interview at the Journal House in Davos, Switzerland.

Anti-DEI Activists Target Goldman Sachs and JPMorgan Chase

Goldman Sachs and JPMorgan Chase are in the crosshairs of right-leaning activist groups privately pushing them to abandon or shrink their diversity, equity and inclusion efforts, according to people familiar with the matter.

Forward Guidance Wednesday (all times ET)

7 a.m.: MBA Weekly Mortgage Applications Survey

9 a.m.: Johnson Redbook Retail Sales Index

Thursday

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

11 a.m.: Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing

Research Home Prices Increased In All 50 Major U.S. Metros In December

Home prices increased in all 50 major U.S. metros in December for the first time since May 2022, according to Redfin. This follows a year where prices only rose in 41 metros after dropping due to high mortgage rates in 2023. Prices had hit a low in April 2023, increasing in just 19 metros. The recovery is attributed to buyers adjusting to higher rates and a housing shortage. December saw the largest annual price jump in nearly a year, with a median price of $427,670, up 6.3%. Cleveland led with a 15% rise, followed by Milwaukee, Philadelphia, Miami and Chicago. Many sellers have a very specific number in mind, Redfin says. They're willing to walk away if they don't get that number, which is one factor keeping prices high. - Chris Wack

Basis Points New Zealand's inflation rate remained largely contained in the fourth quarter, clearing a path for the Reserve Bank of New Zealand to again cut interest rates aggressively in February as it moves to revive the country's moribund economy. Malaysia's central bank kept its benchmark interest rate unchanged yet again, as solid growth and steady inflation gives it room to extend its policy hold. The U.K. government's budget deficit surged in the final month of 2024 , underlining the challenge facing the government in meeting its fiscal rules as interest rates remain high and growth weak. The Swiss National Bank won't rule out negative interest rates or intervention in the foreign-exchange market, Chairman Martin Schlegel said. Negative interest rates and foreign-exchange interventions have worked in the past and the bank is willing to deploy them again if required, he told Bloomberg at the World Economic Forum. The SNB will continue to act in accordance with its domestic mandate despite President Trump's criticism about foreign-exchange intervention, he added. (Dow Jones Newswires) Scotiabank's Derek Holt doesn't believe the Bank of Canada should cut rates again next week, though he acknowledges the central bank may take the easy route. The economist says Canada's jobs market is ripping, and core inflation remains unacceptably warm. (DJN) About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter V icky Ge Huang in New York. Send your tips, suggestions and feedback to [vicky.huang@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

01-22-25 0719ET