Forexlive Americas FX news wrap: Trump calls Zelensky a dictator

• Trump attacks Zelensky in a post, calls him a dictator
• FOMC Minutes: The vast majority of participants judged risks to mandate roughly balanced
• US January housing starts 1.366M versus 1.39M expected
• Fed's Bostic: Did not expect inflation to go in a straight line
• Trump admin orders Pentagon to prepare for 8% budget cuts - report
• RBNZ Governor Orr: We are in an environment of low and stable inflation
• Mexico lowers its 2025 GDP forecast to 0.6% from 1.2%
• The US treasury auctions of $16 billion of 20 year bonds and a high yield of 4.830%
• Atlanta Fed GDPNow growth estimate for Q1 comes in at 2.3% unchanged
• Trump eyes a bigger deal with China that would include nuclear weapons - report
• China says willing to work with US to resolve trade concerns through dialogue
• Trudeau: We are entirely focused on making sure no tariffs ever get brought in on Canada
• Putin says Caspian pipeline "impossible to restore quickly"
• Putin sounds pleased with progress on Ukraine talks

Markets:

• Gold flat at $2934 after touching record $2946
• US 10-year yields down 1.1 bps to 4.53%
• WTI crude oil down $0.44 to $72.29'
• JPY leads, CAD lags
• S&P 500 up 0.1%

Newsflow was steady but it's not clear what any of it means. The main development was a harsh social media posting by Trump criticizing Zelensky, calling for elections and calling him a dictator. It indicates that there are some frictions in the US approach, to say the least. Not surprisingly, Putin indicated he was pleased with what he was hearing in negotiations.

The euro didn't appreciate the turmoil and the US dollar was broadly higher. A separate curve ball came from talk of an 8% cut to US military spending, which isn't something you see often.

There was a risk-averse move in FX but it wasn't really evident elsewhere. Equity markets were slightly higher despite an ugly reversal in Europe while yields were 1-3 bps lower. USD/JPY fell 60 pips on the day on broad yen bids as that pair challenges the lows of the year.

USD/CAD was a solid gainer despite minimal moves in the antipodeans. That was despite a decent day for oil on restricted output from Kazakhstan. The Australian dollar got a short-lived jolt higher on a report that Trump was perhaps looking for a broader deal with China.

Overall, the moves were limited outside of the yen and kiwi finishes the day flat despite the big rate cut.

Eyes tomorrow will be on initial jobless claims and the latest leaks/announcements from Washington.

FX news wrap