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Rubio visits Denmark with presidential secret order, does anyone still care about CPI?
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: Rubio visits Denmark with a secret presidential order, does anyone still care about CPI?". Hope this helps you! The original content is as follows:
The financial market in 2026 failed to follow the script from the beginning. The beginning of the year should have been a calm window for traders to plan their asset allocation for the new year, but the reality caught everyone off guard. The market had generally expected that this year’s theme would be the start of the Federal Reserve’s interest rate cut cycle and the continued penetration of artificial intelligence into the industry. However, as a series of sudden geopolitical events broke out one after another, these moderate macro narratives were quickly marginalized.
The most eye-catching thing is the drastic change in the situation in Venezuela-the country's President Maduro was transferred to the United States to face charges, a move that shocked the international www.xmtraders.community. What’s even more surprising is that U.S. www.xmtraders.companies are ready to invest heavily in Venezuela’s aging oil infrastructure. This not only means that an energy power that has been blocked for a long time may return to the global supply system, but also marks a clear upgrade of the United States' strategic intentions in Latin America. Analysts pointed out that this move is not an isolated action, but part of the Trump administration's global strategic layout.
Immediately afterwards, the United States’ attention quickly turned to Colombia, Cuba, and even as far away as Greenland. The Greenland issue in particular has triggered unprecedented diplomatic tensions as it involves acquiring territory from its ally Denmark. U.S. Secretary of State Rubio is about to visit Denmark, carrying Trump's formal proposal on Greenland. It is reported that the president has not ruled out the possibility of using military means to achieve his goals. This tough stance has cast a shadow on European and American relations. Various signs indicate that geopolitical risks in 2026 may far exceed the tariff turmoil and market shock experienced in 2025.
The tariff ruling is pending, and the fate of the US dollar depends on a Supreme Court decision
If geopolitics is an undercurrent, then the U.S. Supreme CourtThe court's upcoming ruling on the legality of tariffs is a time bomb about to explode. The market generally expects that the ruling will be announced after 23:00 on January 9, with the focus being on whether the president has the authority to impose tariffs based on the 1977 law without congressional approval.
If the ruling supports the presidential power, Trump may immediately restart large-scale tariff actions, and even use additional tariffs as a bargaining chip to pressure the EU in exchange for concessions on issues such as Greenland. Although this strategy of "economic coercion" is controversial, it is not impossible in the current political environment. On the contrary, if the court rules that the existing tariffs are illegal, although the White House is ready to re-implement similar measures in accordance with other legal provisions, this process may still lead to a policy vacuum and market chaos, which will in turn trigger sharp fluctuations in asset prices.
No matter the outcome, gold is seen as one of the biggest beneficiaries. Especially in the scenario where tariffs are judged to be illegal, market concerns about policy uncertainty will rise sharply, driving capital inflows into safe-haven assets. Meanwhile, the U.S. dollar's performance has been more mixed. Although the U.S. dollar has strengthened against both the euro and the pound at the beginning of the new year, partly due to the special risk aversion triggered by the Venezuelan incident, if trade frictions escalate www.xmtraders.comprehensively, traders will often choose to sell the U.S. dollar and embrace alternative safe assets such as the euro and the Swiss franc.
The deeper problem is that once the Supreme Court sets limits on presidential power, the predictability of future U.S. diplomatic, military and even economic decisions will decrease. This means that the market not only has to face immediate policy shocks, but also needs to adapt to a more uncertain governance environment. For non-US currencies, this is both a risk and an opportunity. For example, the Japanese yen has shown some resilience against the backdrop of a strong US dollar, which is supported by the hawkish stance of the Bank of Japan. The market currently expects that it may raise interest rates in September, but the outcome of spring salary negotiations will become a key indicator. Until then, the Japanese authorities are likely to continue to intervene verbally to ensure that USD/JPY does not break through the psychological mark of 160.
Inflation data appears, and the direction of monetary policy remains a mystery
While the outside world is focusing on geopolitical relations and tariffs, traditional macroeconomic data are still silently affecting the market pulse. Next week will usher in a dense economic release schedule, the most watched of which is the December Consumer Price Index (CPI) released on Tuesday. This is the first inflation report that may not be affected by the U.S. government shutdown, so it has a high reference value.
The current market expectation for an interest rate cut in 2026 is about 60 basis points, which is higher than the one rate cut (about 25 basis points) suggested by the Fed's dot plot in December last year. If the CPI shows that price pressures continue to slow down, it will be in contrast to the previous judgment of Fed officials that "inflation will remain high", thus providing space for the new chairman to start cutting interest rates early. It is worth noting that Trump has yet to announce Powell’s successor, and this personnel suspense has also added additional variables to monetary policy.
Retail sales and the Producer Price Index (PPI) for November will also be released on Wednesday, with the former considered to be the driver of consumption momentum.important indicators. If the data is strong, it may push up the current 2.7% growth forecast of the Atlanta Fed's GDPNow model, temporarily supporting the dollar. However, considering that doves dominate the Fed’s voting www.xmtraders.committee this year, the voices of hawkish members including Hammack of the Cleveland Fed and Logan of the Dallas Fed will receive special attention. With only 20 days left before the next meeting, officials need to clearly express their stance before the silent period, and the market is paying close attention to any subtle changes in tone.
In Europe, the euro continues to weaken. In addition to the lack of new benefits, it is also subject to the prospect of potential deterioration in relations between Europe and the United States. Rubio's visit to Denmark may exacerbate this risk, thereby weakening the attractiveness of the euro. Although the European Central Bank currently maintains policy unchanged, it does not rule out that it will be forced to turn to easing if the trade friction leads to a significant economic downturn. Generally speaking, in the current situation dominated by geopolitical risks, although traditional macro factors have temporarily taken second place, once the situation eases, they will quickly return to the center of the stage and determine the market direction in the next stage.
The above content is all about "[XM Foreign Exchange Market Analysis]: Rubio visits Denmark with a secret presidential order, does anyone still care about CPI?" It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some contents in the article still need to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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