Forex Today: Markets Await Fed and Bank of Canada – 29 January 2025

Two central bank meetings today at the US Federal Reserve and the Bank of Canada will be closely watched by the Forex market.

1. Markets are awaiting central bank meetings at the US Federal Reserve and the Bank of Canada today. The Bank of Canada is widely expected to cut its Overnight Rate by 0.25% to a new rate of 3.00%. The US Federal Reserve is widely expected to leave its Federal Funds Rate unchanged at 4.50%, so markets will be paying more attention to the contents of the FOMC Statement and the following press conference. Depending on what is said and done, and on whether there is any further talk about US tariffs (especially tariffs which could be imposed on Canada), we could see volatility in the US Dollar and in the Canadian Dollar, which might put ;the USD/CAD currency pair ;in focus.
2. Following Monday's shocking reveal that the Chinese AI tool DeepSeek seems to be as good as, or even better than, the American ChatGPT, which triggered a sharp selloff in American tech stocks, especially the AI sector, markets now seem to have digested the news and moved on, with global equities rising firmly over the past day, and ;the NASDAQ 100 ;and ;S&P 500 ;Indices making strong recoveries. DeepSeek does not seem to have done sustained significant damage to the American tech sector. NVIDIA, the worst-hit American AI company, also saw a recovery in its share price yesterday.
3. Australian CPI (inflation) data released a few hours ago was marginally lower than expected in part. While the annualized rate rose from 2.3% to 2.5% as expected, the quarterly rate came in slightly lower than expected, which might slightly reduce pressure on the RBA to cut rates further in the near term.
4. Yesterday saw President Trump threaten to impose new and relatively high tariffs on:
1. Countries that pose security threats to the USA
2. Computer chips
3. Pharmaceuticals
4. Steel
5. Aluminum
6. Copper
5. There have not been any significant developments on this topic over the past day, but it retains the possibility to generate sudden news items which can move markets.
6. In the Forex market, since todays Tokyo open, the British Pound has been the strongest major currency, while the Australian Dollar has been the weakest. However, the numbers are quite mall and not likely to mean much. ;
7. Corn futures ;have regained value, and remain within a long-term bullish trend, despite not breaking to new highs in recent days.
8. It is a public holiday in China today.
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