FX Daily: Cross current to keep ranges intact in Daily Currencies Ratings 15/01/2026 USD: Fed will be in no hurry to cut rates Where the frantic geopolitical opening to 2026 connects with financial markets has largely been in the energy space. The latest swing here was a 5% drop in Brent crude last night as President Trump seemed to step back from imminent military action in Iran. These swings serve as a reminder that investors remain reluctant to chase new themes emerging from Washington on fears of policy reversal. That is probably the reason that the dollar and Treasuries have not sold off on the legal investigation into Fed Chair Powell. Ultimately, however, we think this attack on the Fed will add to the case for de-dollarisation. On that subject, tonight sees the release of the US Treasury TIC data for November. Foreigners only net sold US portfolio assets in the single month of April last year, and last year’s 10% dollar sell-off was a function of hedge adjustments, not outright asset sales. Still, we will want to see what the official sector is doing with Treasury holdings, where China has downsized in four of the last six reporting months. Adding to the choppy environment has been seemingly good demand for EM assets. Looking at one of the largest EM ETFs, the iShares Core MSCI EM, last week saw the single largest inflow since 2021. The cross-current of investors wanting to diversify their concentration risk away from the US tech sector is perhaps one headwind why the dollar is not a little stronger right now. Returning to the domestic US story, last night’s release of the Fed’s Beige Book suggests the central bank will be in no hurry to cut. Activity was flat to higher in eight of the 12 Fed districts, and there was no sign of any deterioration in the labour markets. Having pushed expectations of Fed policy easing this year back to a cut in June and then December, the next move in the rates market could be to price out the second Fed rate cut this year – a dollar positive. On today’s calendar, we have the weekly jobless claims calendar (expected at a low 215k) and a few Fed speakers (Goolsbee, Bostic and Barkin) – none of which look likely to move the needle on the Fed story. We see DXY staying gently bid in a 98-100 range for the next couple of weeks (perhaps for a couple of months too) until the attractive draw of overseas economies starts to sap the dollar from the second quarter onwards. ‘Choppy’ is how we have described FX markets in our latest FX Talking. Chris Turner EUR: Waiting on the European growth engine At 0900 CET today, we will get the first release of full-year German GDP growth for 2025. We and consensus expect a 0.2% figure after last year’s 0.5% contraction. The good news is that we expect German growth to build sequentially in 2026, delivering a full-year figure of 0.9%. We will also see the release of November industrial production data for the euro area. This should deliver another healthy 0.5% month-on-month increase after an earlier 0.8% increase. That should maintain the narrative that European industry is on the mend and could provide some support to the euro. EUR/USD traded volatility remains near multi-year lows, and we cannot see any immediate catalysts to reverse this. EUR/USD grinding towards 1.1600 looks unlikely to change this either. Chris Turner GBP: Correction may have further to run The UK delivered a positive set of data this morning, including a higher-than-expected monthly GDP figure for