The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0907 ET - The Canadian dollar and Mexican peso risk falling further against the U.S. dollar if U.S. President Trump follows through on his proposal for 25% tariffs on imports from those two countries, ING forex strategist Francesco Pesole says in a note. ING estimates that the risk of such hefty tariffs on Canadian goods is unlikely fully priced in, raising the prospect of further falls in the Canadian dollar. "We expect a USD/CAD rally north of the 1.45 area for now," he says. USD/CAD rises 0.9% to 1.4442, having earlier hit a multi-year peak of 1.4512, according to FactSet. USD/MXN rises 0.8% to 20.656. (miriam.mukuru@wsj.com)USD/CAD earlier hit its highest since early 2020 at 1.4512, FactSet data show. "Canada Dollar At Risk of Nearing All-Time Low Amid Tariff Threat -- Market Talk," at 1340 GMT, misstated the year.

0900 ET - Europe can't be afford to be a second or third-level ally for the U.S., Ukraine President Volodymyr Zelensky tells the World Economic Forum in Davos, Switzerland. It's not clear whether Europe will have a seat at the negotiating table where the end to the Ukraine-Russia war will be decided, he says. "Europe needs to learn how to fully take care of itself so that the world can't afford to ignore it," Zelensky says. (cristina.gallardo@wsj.com)

0850 ET - Treasury yields extend their losses in the first day of trade in the U.S. after President Trump's inauguration. Trump stops short of imposing tariffs in his first day, but reaffirms they are coming. Yields fell last week on relatively mild inflation data, while the Fed is expected to keep interest rates unchanged next week and cut them once or twice later this year. Data due ahead of the FOMC meeting are unlikely to change the outlook. The 10-year is at 4.557% and the two-year at 4.254%. (paulo.trevisani@wsj.com; @ptrevisani)

0842 ET - Europe will do everything it can to maintain a good defense cooperation with its transatlantic partners within the NATO alliance, German Chancellor Olaf Scholz tells the World Economic Forum in Davos, Switzerland, in a message targeted at the U.S. in particular. The new U.S. President Donald Trump has said he wants all NATO countries to increase their defense spending to 5% of their gross domestic product. Scholz notes that "nearly every European country" is spending more than 2% of its GDP on defense. "My view is that we should keep this and that those who have not reach the goal should do it very fast," he says. According to NATO data, 23 out of NATO's 32 member states spent above the 2% minimum threshold on defense last year. Spending by Italy, Belgium, Croatia, Luxembourg, Portugal, Slovenia, and Spain remains below the 2% target. (cristina.gallardo@wsj.com)

0840 ET - The Canadian dollar retreats, with early-week gains wiped out. It now risks dropping towards a record low against the U.S. dollarafter President Trump told reporters he's eyeing a Feb. 1 start date for hefty tariffs on Canada and Mexico, citing inadequate border security, economist David Rosenberg says. Canada and Mexico "probably do feel a little broken at this point," Rosenberg says in his note to clients. USD/CAD earlier hit its highest since early 2000 at 1.4512, FactSet data show. Another break higher could set the stage for the Canadian dollar to drop towards a record low of C$1.61, set back in 2002. (Paul.Vieira@wsj.com, @paulvieira)

0835 ET - The European Commission should strike free trade agreements with countries including India, Indonesia and Malaysia, German Chancellor Olaf Scholz tells the World Economic Forum in Davos, Switzerland. Recent trade deals signed by the European Commission with Mexico and Mercosur--Argentina, Bolivia, Brazil, Paraguay and Uruguay--shouldn't be the last ones, Scholz says. "It would create wealth if we had more free trade agreements between the European Union and other countries and regions," he says. (cristina.gallardo@wsj.com)

0832 ET - Major economies must work together to avoid a "race to the bottom" as they seek to gain ground with access to new technologies and raw materials, European Commission President Ursula von der Leyen says in a speech during the World Economic Forum at Davos. "We have entered a new era of harsh, geostrategic competition," she says. "As this competition intensifies, we will likely continue to see frequent use of economic tools, such as sanctions, export controls and tariffs," she says, adding that "we will need to work together to avoid a global race to the bottom, because it is in no one's interest to break the bonds of the global economy." The EU chief also says she will visit India in an effort to update the bloc's strategic partnership with the country. (edith.hancock@wsj.com)

0828 ET - Russian President Vladimir Putin "must not be successful in his war of aggression unleashed on Ukraine," German Chancellor Olaf Scholz tells the World Economic Forum in Davos, Switzerland. He says Putin hasn't achieved any of his goals in Ukraine, including installing what he describes as a "pro-Russian puppet regime in Ukraine." Putin's invasion has also brought Ukraine closer to the European Union, Scholz adds. The social democratic leader says the West will continue to support Ukraine, insisting that the country must have the final say on decisions affecting its future. (cristina.gallardo@wsj.com)

0820 ET - Germany will deal with Trump's decisions "without fake cozying up" to him, German Chancellor Olaf Scholz tells the World Economic Forum in Davos, Switzerland. The new U.S. president will keep the world "in suspense" over his plans for trade, energy, and foreign and security policy, Scholz says. But the world should keep "cool heads" when Trump posts his views on social media, the social democratic politician says, insisting that the U.S. remains Germany's closest ally outside Europe. (cristina.gallardo@wsj.com)

0818 ET - Standard Chartered will continue what it did during Trump 1.0 as the U.S. president moves into the White House for another term, the chairman of the London-listed and Asia-focused bank tells CNBC at the World Economic Forum in Davos, Switzerland. "Regardless of the changes in the political environment in the United States, our strategy remains the same--which is being close to our clients, both in the corporate and financial institution side and also in the wealth and affluent side--to help our clients navigate the best they can these uncertainties and also bring to them opportunities," says Jose Vinals. He hopes China and the U.S. can have as good relationships as possible. This is important for StanChart as a connector between East and West and South and South. (elena.vardon@wsj.com)

0737 ET - Donald Trump faces a much less positive backdrop in his second term as U.S. president due to higher interest rates and has less room for making economic improvements, former IMF chief economist Kenneth Rogoff says in an interview with Bloomberg at the World Economic Forum in Davos, Switzerland. The economist says current interest-rates levels raise concerns around the compounding effect on the country's deficit. This backdrop questions the sustainability of gross domestic product growth as it remains way below the deficit, he adds. The economist forecasts the stabilization of inflation over the next five years, but another burst of inflation over the long term. (michael.susin@wsj.com)

(END) Dow Jones Newswires

January 21, 2025 09:07 ET (14:07 GMT)

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