Trump Eases Trade Pressure, Shifts Focus to Greenland Talks and US Data
Global markets are starting the day focused first on politics, after a series of high impact statements from US President Trump reshaped short term sentiment and reduced immediate tail risks that had been building over trade and geopolitics.
The White House confirmed that tariffs scheduled to take effect on February first will not be imposed, following what Trump described as productive discussions with NATO Secretary General Rutte regarding Greenland and the broader Arctic region. The decision removed a key source of near term uncertainty for markets that had reacted negatively to the prospect of new trade barriers tied to the dispute. Trump framed the talks as the foundation of a future deal that would benefit the United States and all NATO members, while confirming that negotiations will be led by Vice President Vance, Secretary of State Rubio, and Special Envoy Witkoff, all reporting directly to him.
Speaking at the World Economic Forum in Davos, Trump reinforced his view that Greenland is strategically vital for US national security and argued that neither Denmark nor NATO is capable of defending the territory without US involvement. At the same time, he made a clear effort to calm markets by stating that military force would not be used to pursue any agreement, a comment that immediately helped stabilize risk sentiment after a volatile prior session. Equity markets rebounded, the dollar steadied, and some of the defensive demand for gold eased, although underlying geopolitical risk remains elevated. Trump’s broader remarks continued to pressure Europe and NATO, with repeated claims that the Us has been treated poorly by its allies and carries a disproportionate share of global security and economic support. These comments keep geopolitical risk firmly in play for currency and precious metal traders, even as the immediate tariff threat has been delayed.
After the political headlines, attention shifted to economic data from Australia released this morning, which provided a more constructive tone for the Asia Pacific session. Australian labour market data for December showed a clear improvement, reinforcing the view that the economy is holding up better than feared despite higher interest rates. In seasonally adjusted terms, the unemployment rate fell to 4.1%, while employment increased to 14,684,100. The data provided near term support for the aussie, as it reduces pressure on the Reserve Bank of Australia to move quickly toward aggressive easing. While inflation remains a separate challenge, the labour market data suggests domestic demand is not collapsing, which keeps Australia relatively well positioned compared with other developed economies.
Looking ahead to the US session, market focus will turn to two key releases tonight, the final estimate of US GDP growth for the fourth quarter and the Core PCE Price Index. These releases are especially important given the political backdrop and ongoing debate about the future path of the interest rates. The most recent confirmed GDP data shows that the US economy grew at a strong annualized pace of 4.3% in the third quarter, driven by resilient consumer spending and investment. That strong performance set a high bar heading into the fourth quarter, where growth is expected to slow but remain positive.
Based on published forecasts from professional forecasters and prior estimates, expectations for fourth quarter GDP point to modest but continued expansion, reflecting softer consumption momentum and tighter financial conditions late in the year. While exact figures will be confirmed in the final release, markets are positioned for growth that is meaningfully slower than the third quarter but still consistent with an economy avoiding recession. Any meaningful revision higher or lower could have an outsized impact on the dollar, particularly against low yielding currencies and risk sensitive pairs.
The Core PCE Price Index will be equally important for market direction. The most recent confirmed data shows that core PCE inflation rose by around 0.2% month over month in each of the past several readings, with the year over year rate near 2.8% as of September. That places inflation above the Federal Reserve’s 2% target, but well below the peak levels seen in earlier periods. Expectations for tonight’s release center on another steady monthly increase, reinforcing the idea that inflation is cooling gradually rather than falling sharply. Persistent services inflation remains a concern for policymakers, and this data will be closely watched for confirmation that disinflation has not stalled.
For forex and gold traders, the combination of easing tariff fears, strong Australian labour data, and critical US growth and inflation releases creates a complex trading environment. A softer US GDP or inflation outcome could weaken the dollar and renew upside momentum in gold, while stronger data would likely reinforce dollar support and cap gains in precious metals. With geopolitics still simmering and central bank credibility under scrutiny, markets remain highly sensitive to both headlines and hard data, making tonight’s US releases a key risk event for positioning into the next trading sessions.
Analysis by Coach Angel
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Disclaimer: Investing is risky. Investors should study the information before making investment decisions.
