The US dollar is trading mostly lower with the USDJPY the weakest (-0.34%). THe greenback is lower by 0.17% versus the GBP and down -0.10% versus the EUR. The changes versus the other currency pairs including the CHF, CAD, AUD and NZD are all within 0.10% from the closing levels yesterday.
Tariffs? What tariffs. China’s 2025 trade data show exports powering the economy to a record surplus, defying expectations that tariffs would meaningfully slow its manufacturing engine.
Key takeaways:
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China’s trade surplus hit a record $1.19 trillion in 2025, underscoring export strength despite tariff pressure.
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Exports rose 5.5% in 2025, only slightly slower than 2024, while December exports grew 6.6% YoY and imports rebounded 5.7% YoY.
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Shipments to the United States fell 20%, but losses were offset by strong gains to Southeast Asia (+13%), the European Union (+8.4%), Latin America (+7.4%), and Africa (+26%).
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Global demand—helped by AI-related spending—and producer-price deflation kept Chinese goods competitive abroad.
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Manufacturing and exports drove growth, while property and household consumption lagged, reinforcing a “two-track” economy.
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Supply-chain diversification hasn’t displaced China; even when final assembly shifts elsewhere, Chinese components and equipment remain central.
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Geopolitical risks are rising, with concerns about cheap-goods inflows and warnings from the International Monetary Fund that China is too large to rely on exports for growth.
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2026 outlook is mixed: some export strength was front-loaded due to tariff uncertainty, but competitiveness and resilient global demand may keep exports firm; Beijing is phasing out export tax rebates for solar products and batteries amid oversupply.
Can China keep the growth without the US? Was the numbers skewed because of the frontloading of inventory? So far they have weathered the storms.
In Japan, the election drama continues to unfold. Japan opposition parties CDP and Komeito today have started talks on forming a new party. That sent the USDJPY lower and back below the January 2025 high at 158.87. The next targets come in at the November high at 157.89. The December high was at 157.76. The low price today reached to 15815. That was just short of the rising 100 hour MA at 158.08 (blue line on the chart below).
Japanese Prime Minister Sanae Takaichi is said to be poised to dissolve the House of Representatives on January 23, 2026, triggering a high-stakes snap general election.
The Essentials:
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Target Dates: Election Day is expected to be either February 8 or February 15, 2026.
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The Strategy: Takaichi is looking to capitalize on her 70% approval rating to reclaim a solid majority for the Liberal Democratic Party (LDP). The party currently relies on a “confidence and supply” coalition deal with the Japan Innovation Party to stay in power.
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The Risks: Calling an election now could delay the 2026 National Budget, potentially impacting local government funding and inflation-relief measures.
There ware more bank earnings today with Wells, BofA and Citigroup announcing today. JPMorgan and Bank of New Yorked kicked off the earnings season yesterday.
So far, the early U.S. bank earnings point to a mixed start to the season, with stronger-than-expected results at the money-center banks offset by softer performance from regional lenders.
Earnings recap:
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Citigroup (C) Q4 2025: EPS $1.81 (BEAT; exp. $1.68), Revenue $21.0B (BEAT; exp. $20.55B)
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Bank of America (BAC) Q4 2025: EPS $0.98 (BEAT; exp. $0.96), Revenue $28.4B (BEAT; exp. $27.56B)
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Wells Fargo (WFC) Q4 2025: EPS $1.62 (MISS; exp. $1.66), Revenue $21.3B (MISS; exp. $21.64B)
Looking the share prices:
- JP Morgan tumbled 4.19% yesterday and is unchanged in premarket trading today.
- Bank of New York rose 1.88% yesterday. Its shares are currently trading up 0.06% in premarket trading.
- Bank of America shares fell -1.18% yesterday and are currently down -0.4% today.
- Wells Fargo fell -1.47% yesterday and premarket shares are down -1.88%.
- Citigroup fell -1.19% yesterday and is currently up 0.09% today
Overall, the US stock indices are currently trading lower:
- Dow industrial average -142 points.
- S&P index -27 points
- NASDAQ index -128 points
in the US debt market, yields are marginally lower:
- 2-year yield 3.520%, -0.8 basis points
- 5 year yield 3.732%, -1.0 basis points.
- 10 year yield 4.159%, -1.1 basis points
- 30 year yield 4.821%, -0.7 basis points
US PPI will will be released at the bottom of the hour with the headline expected to rise by 0.2% and X food and energy also expected to rise by 0.2%. The YoY numbers are both expected to come in at 2.7%
