Dollar rally on pause ahead of Trump inauguration

Treasury yields dropped sharply across the curve, risk assets rallied, and the dollar fell against all its G10 peers, including the pound and the Canadian Dollar, both of which are mired in domestic troubles. Most emerging market currencies rebounded as well off the back of the inflation news.

The moves were, however, mostly quite shallow, as financial markets await details on the Trump administration's tariffs, with investors unwilling to push too hard on any trend until there is more visibility on that front.

The Martin Luther King holiday means a relatively light economic and policy calendar in the US on Monday, so all eyes will be on Trump’s inauguration at 5pm GMT today.

This looks set to accelerate the newsflow around all aspects of economic policy, particularly his tariff plans, which are likely to drive moves in financial markets in the near future.

Trump has already planned a ‘blizzard’ of executive orders on his first day back in the White House, so investors will be awaiting his upcoming communications with bated breath.