Oil Price Firms After Trump Lessens Military Threat Against Iran – Currency Thoughts

Oil Price Firms After Trump Lessens Military Threat Against Iran

January 15, 2026

The price of West Texas Intermediate crude oil rebounded 4.2% overnight after President Trump withdrew his threat of immediate military action against Iran. Trump did this because info he has received suggests that the killing of protesters in Iran has lessened greatly.

In other market developments overnight,

• The dollar is mostly mostly higher, with gains of 0.4% against the South Korean won, 0.2% versus the Canadian dollar, euro and sterling and 0.1% relative to the Swiss franc, South African rand and New Zealand dollar. The unchanged yen has been an exception, reflecting the threat of intervention support made by Japanese officials lately.
• Gold and silver prices, which had experienced sharp gains earlier this month, settled back 0.4% and 0.5% overnight.
• The futures trading readings of the DOW, SPX, and Nasdaq shortly before today’s batch of data releases were 0.3% to 0.9% higher. This bottom-fishing followed consecutive market losses on Tuesday and Wednesday. The DOW early indication was only flat, a sign that the investment community is unconvinced about the market’s near-term direction.
• European stock markets are mixed so far, with losses in Spain and Italy, gains in the U.K. and Italy, and no net change in Germany whose GDP performed weakly in 2025, extending an 8-year span in which the economy has expanded just 0.3% per annum.
• Asian equity markets closed mostly lower, with gains of 1.6% in South Korea and 0.5% in Indonesia being exceptions.
• Ten-year sovereign debt yields were up 3 basis points in the U.K. and by a single basis point in the United States and Germany but down two basis points in Japan.

Arriving U.S. data this morning failed to give Fed officials any incentive to obey President Trump’s commands. New jobless insurance claims dealt a blow to the narrative that unemployment is poised to ramp much higher. At 198k, they fell to a six-week low and were almost 20k below the consensus forecast in the street. Even more telling, their four-week average of 205k was the fewest in a year. Separately, the month Empire State and Philly Fed manufacturing surveys both improved sharply and by more than analysts had been predicting. Then there was the Labor Departments import and export price figures for November, which are somewhat difficult to discern due to the absence of an October observation. Year-on-year import price inflation was low at 0.1% in November but up from minus 0.6% in mid-2025. Export prices between September and November advanced by 0.5%. These figures come on the heels of yesterday’s released Fed Beige Book, which pointed to a pickup of growth in several Fed districts and, more importantly, included feedback that firms are becoming more inclined to pass on higher tariff expenses to consumers.

Turning to data released in other countries, German GDP rose 0.2% in 2025 following contractions of 0.9% in 2023 and 0.5% in 2024 and leaving average annual growth since 2018 at 0.28% per year.

Industrial production in the euro area climbed 0.7% in November, matching October’s increase and resulting in a six-month high year-on-year advance of 2.5%. Euroland’s seasonally adjusted trade surplus narrowed to a 3-month low in November of EUR 10.7 billion. The unadjusted surplus of EUR 9.9 bln was down from EUR 15.4 billion in November 2024. Euroland’s current account surplus-to-GDP ratio of 1.2% was down from 1.7% in the second quarter, 2.5% in the first quarter and 2.1% in the third quarter of 2024, attesting to a more challenging environment due to U.S. tariffs and Russia’s war to reacquire surrounding territories.

Several British economic reports arrived today. Monthly GDP growth of 0.3% in November outpaced expectations, followed declines of 0.1% in both September and October, and lifted year-on-year growth to a four-month high of 1.4%. Industrial production had been expected to inch up just 0.1% but instead climbed 1.1% on top of a 1.3% October increase. Construction output, on the other hand, fell 1.3% on month and 1.1% on year. The goods and services trade deficit totaled GBP 6.116 billion, well above expectations and not much smaller that October’s 43-month high of GBP 6.53 billion. The merchandise trade deficit of GBP 23.7 billion was 22% wider than a year earlier.

Preliminary estimates of CPI inflation in December were left unrevised in Spain (a 4-month low of 2.9%), France (a 7-month low of 0.8%) and Sweden (0.3% which matched October’s reading).

Polish consumer price inflation of 2.4% in December was its lowest in 20 months. Slovakian CPI inflation edged 0.1 percentage point higher to a 3-month high of 3.8% last month. Bulgarian inflation of 3.0% was at a half-year low, and Croatia’s 3.3% reading was its lowest since last April. In Ireland, consumer price inflation ended 2025 with a reading of 2.8%, a 3-month low.

China reported a greater-than-expected amount of new yuan loans last month (CNY 910 billion) but lower than CNY 990 billion a year earlier. Year-on-year growth in the M2 stock of Chinese money accelerated to a 4-month high of 8.5%.

In India, which has been the object of particularly aggressive tariff pressure from the United States, the trade deficit of $25.04 billion last month was 21.5% larger than in December 2024. However, Indian unemployment of 4.8% was just slightly above the 4.7% record low experienced in November.

Officials at the Bank of Korea left their key interest rate again unchanged at 2.5%, the level since a 25-basis point cut in November of 2024. Their decision was not unexpected. But the meeting’s highlight was a somewhat less dovish accompanying statement that no longer hints of resumed rate cuts sometime during 2026. The rate peak of 3.5% occurred between January and October of 2023.

 Inflation is expected to gradually decline, although the elevated exchange rate remains a source of upside risk. Regarding financial stability, risks still remain related to housing prices in Seoul and its surrounding areas, to household debt, and to the heightened exchange rate volatility. Therefore, the Board will make its policy decisions, amid supporting a recovery in economic growth, while closely monitoring changes in domestic and external policy conditions and the resulting impact on inflation dynamics and financial stability developments.

Copyright 2025, Larry Greenberg. All rights reserved. 

Tags: Bank of Korea, British trade and industrial output, Euroland industrial production, German GDP in 2025, U.S. jobless insurance claims and import prices

ShareThis

This entry was posted
on Thursday, January 15th, 2026 at 7:37 am and is filed under New Overnight Developments Abroad – Daily Update.
You can follow any responses to this entry through the RSS 2.0 feed.