Thursday 30 January: little bit of limbo.

There has been a lot of information to take in this week. And currently, I find myself in a little bit of limbo in terms of having confidence in the direction of the currencies.

Risk sentiment stabilised following the Deepseek led tech selloff, but the 'risk currencies' didn't follow suit.

The BOC delivered a 0.25bp rate cut, which was largely priced in and the CAD ended the day where it began, despite 'still relatively dovish' rhetoric.

The FED held rates as expected but did sound hawkish, keeping the higher for longer US rates narrative in tact. Perhaps to the dislike of Mr Trump, who last week was suggesting faster rate cuts. The USD didn't strengthen as you would 'think' it would following a hawkish tone. US GDP data came in soft (bad news is good news) but jobless claims reported lower (backs up higher for longer).

The ECB cut rates and Similar to Canada, sounded fairly dovish. But the EUR hasn't weakened.

Company earnings continue to remain robust, although cautious forward guidance from Microsoft has hit the MSFT price.

All in all, whilst on the whole, market sentiment remains tentatively positive, tariff threats, deciphering the FED rate cut path, uncertainty surrounding the BOJ and any other 'potential Trump volatility' appear to be muddying the water.

Which is a shame given by the end of last week I was hopeful of a calmer, more straightforward environment. But we can only follow our instincts, which for now, means sitting and waiting for clarity.

Perhaps Fridays PCE data will nudge everything into place.

Feel free to email any questions: johnelfedforexblog@gmail.com