Weekly Forex News & Market Pulse

This week, global markets moved up and down as traders reacted to news, economic data, and political statements. Trade tension worries, China growth concerns, and UK inflation data all influenced market direction. Currencies, commodities, and stocks remained volatile throughout the week. In this weekly market newsletter, we explain what happened in the markets, which assets were most affected, and what traders should watch next week.

Global Markets Face Volatility as Trade Tensions Return

Global markets started the week under pressure after renewed trade-related comments from Donald Trump raised concerns of fresh tariffs and geopolitical friction between the US and Europe, increasing uncertainty across risk assets.

Impact:
Global equities declined early in the week, safe haven demand rose, gold strengthened, and investors reduced exposure to risk assets amid rising headline-driven volatility.

China's GDP Growth Slows but Meets Official Targets

China released its latest GDP data showing slower economic growth compared to previous quarters, though overall figures remained close to government targets, keeping focus on weak domestic demand and long term growth risks.

Impact:
Asian equities traded cautiously, commodity-linked currencies weakened initially, while broader markets stabilised as investors avoided aggressive risk-off positioning.

UK Inflation Data Delays Bank of England Rate Cut Hopes

UK CPI inflation came in higher than expected mid-week, signalling persistent price pressures and reducing expectations of an early interest rate cut by the Bank of England in the coming months.

Impact:
The British pound remained supported, UK equities saw mild pressure, and bond markets adjusted to slightly higher interest rate expectations.

Davos 2026 Highlights Global Growth and Policy Risks

At the World Economic Forum, global leaders and central bankers warned of fragile economic growth, geopolitical risks, and cautious policy outlooks, shaping investor expectations for 2026.

Impact:
Markets stayed range-bound, volatility remained elevated, and investors favoured selective positioning rather than aggressive risk-taking.

Easing Trade Rhetoric Lifts Global Market Sentiment

Later in the week, US officials softened earlier trade-related statements, reducing fears of escalation and improving confidence across global financial markets.

Impact:
European and US equities rebounded, risk sentiment improved, and safe-haven assets gave up part of their earlier gains.

Bank of Japan Policy Decision Supports Asian Markets

The Bank of Japan kept monetary policy unchanged, signalling stability while continuing to monitor inflation and economic conditions.

Impact:
Asian equities closed the week higher, the yen remained volatile, and overall risk appetite improved into the weekend.

US Trade Tariff Statements Create Global Market Volatility

At the start of the week, trade-related statements from Donald Trump increased concerns about possible new tariffs between the US and Europe. Investors became cautious as uncertainty around global trade and economic growth increased.

Impact:
Global stock markets fell early, gold prices moved higher, and investors reduced risk exposure due to fear of renewed trade tensions.

World Economic Forum Davos 2026 Highlights Global Economic Risks

During the World Economic Forum, global leaders, central bankers, and business heads discussed slow economic growth, rising geopolitical risks, inflation concerns, and the need for careful decision-making to avoid financial instability in 2026.

Impact:
Markets remained cautious, price movements stayed controlled, and investors avoided aggressive buying while focusing on safety and stability.

European Leaders Respond to US Trade and Political Pressure

European leaders publicly responded to US trade comments, stressing unity, calm diplomacy, and stable economic relations. Discussions focused on avoiding conflict and maintaining strong trade ties between Europe and the United States.

Impact:
European stocks recovered, the euro stabilised, and concerns about an immediate trade conflict between the US and Europe were reduced.

Crude Oil Prices Fall as Global Risk Concerns Ease

Crude oil prices recorded the biggest commodity move of the week after trade tensions eased and geopolitical risks reduced. Markets no longer expect near-term supply disruptions, leading to lower oil prices across global markets.

Impact:
Oil prices declined sharply, energy stocks underperformed, and inflation pressure expectations eased slightly worldwide.

Gold Prices Rise on Safety Demand Before Stabilising

Gold prices increased early in the week as investors looked for safe assets during trade uncertainty and political headlines. Later, prices stabilised when global stock markets recovered, and overall risk sentiment improved.

Impact:
Gold ended the week stable as demand for safe-haven assets reduced with improving market confidence.

Bank of Japan Keeps Policy Steady, Supports Asian Markets

The Bank of Japan kept interest rates unchanged and signalled policy stability. Officials said they would closely watch inflation and growth before making any future policy changes.

Impact:
Asian stock markets closed higher, currency volatility reduced, and investor confidence improved by the end of the week.

Global Leaders Focus on Stability Over Sudden Policy Changes

Across Davos meetings and other international discussions, global leaders spoke about working together, keeping economies stable, and making slow policy changes instead of sudden moves that could harm financial markets.

Impact:
Markets avoided sharp price swings, sentiment stayed stable, and investors preferred careful and selective trading decisions.

Major Currency Pair Movements

• EUR/USD: Moved in a narrow range as trade news and Davos talks kept traders cautious. No strong direction for most of the week.
• GBP/USD: Stayed strong after UK inflation came higher than expected. This reduced chances of early rate cuts and supported the pound.
• USD/JPY: Was volatile during the week. After the Bank of Japan kept policy unchanged, the pair settled lower by the end.
• AUD/USD: Fell early in the week due to concerns about China’s growth. Later recovered slightly as global market sentiment improved.
• USD/CHF: Fell at the start of the week as investors moved to safe assets. Later recovered when risk appetite returned.
• EUR/GBP: Moved lower as the British pound performed better than the euro following strong UK inflation data.

Trader’s Takeaway

• Trade headlines carefully. This week showed how tariff news can push markets down fast and then reverse just as quickly.
• Do not chase the first move. Early week selling reversed after the trade tone softened. Wait for follow-up confirmation.
• Inflation news matters for currencies. UK CPI supported GBP, showing how high inflation can delay rate cuts and strengthen a currency.
• China data impacts risk pairs. Weak China growth pressured AUD early in the week, useful for short-term trades.
• Oil reacts more to politics than data. Falling geopolitical risk pushed crude lower despite no supply change.
• Gold works as short-term protection. It rose during uncertainty and stalled once risk sentiment improved.
• Central bank tone guides direction. The Bank of Japan staying steady helped Asian markets stabilise by the weekend.
• In news-heavy weeks, risk management beats prediction. Smaller trades and clear stop losses matter most.

What to Watch Next Week

US Dollar and Trade News

This week’s trade statements can still affect markets next week. Any new comments from US leaders may move the US dollar, especially against the euro and Japanese yen.

GBP After UK Inflation Data

UK inflation stayed high this week. If Bank of England officials speak next week, the British pound may remain strong and volatile.

China's Impact on AUD and Asia FX

Concerns about China’s growth can continue to impact the Australian dollar and Asian currencies. Any new China data or policy news may cause sharp moves.

Oil Prices and Commodity Currencies

Oil prices fell this week after geopolitical tensions eased. If no new risks appear, oil may stay weak, affecting currencies linked to commodities.

Gold as a Safe Haven Asset

Gold reacted to news this week. If global uncertainty rises again next week, gold prices may move higher as traders look for safety.

USD/JPY After Bank of Japan Decision

After the Bank of Japan policy update, the yen may stay volatile next week depending on global market sentiment.

Davos Follow-Up Headlines

Comments from Davos meetings can still influence markets. Traders should watch for follow-up statements that may shift sentiment without new economic data.

Weekly Market Summary

Global markets closed the week with a cautious but stable tone. Early volatility was driven by trade-related headlines and global growth concerns, while mid-week inflation data and central bank signals helped calm sentiment.

China's growth worries pressured risk assets early, UK inflation supported the pound, and easing trade tensions later in the week lifted equities. Commodities like oil and gold reacted mainly to geopolitical news rather than data.

Overall, markets shifted from risk off to balanced by Friday. Traders remained selective, focusing more on risk management than aggressive positioning as headline-driven volatility stayed high.

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Disclaimer

This newsletter provides market insights and weekly summaries. These are expectations, not guarantees. Markets can change due to unexpected events. Always trade responsibly and use proper risk management.