The euro remains near its strongest level since late September. Support has come from the ECB keeping rates unchanged, expressing confidence in the eurozone’s resilience to US tariffs, and raising its 2025 growth forecast to 1.4%. Stronger-than-expected data, including a sharp drop in German import prices due to lower energy costs, also helped sentiment, even as German bond yields eased from recent highs. European stocks finished modestly higher, led by pharmaceutical shares after Novo Nordisk secured US approval for its oral obesity drug.

The yen has pulled back from recent highs as repeated warnings from Japanese officials about possible FX intervention limited gains, while a weaker US dollar—on expectations of Fed rate cuts—offered some support. Japan’s 10-year bond yield slipped to 2.02% from record levels after the BoJ’s recent rate hike, with markets weighing the impact of a record-sized FY2026 budget that will require more bond issuance and awaiting policy clues from Governor Ueda’s upcoming speech. Recent BoJ minutes pointed to a steady but moderate economic recovery, inflation led by food prices, and ongoing global risks, while today’s data showed stable service-sector inflation and economic indicators consistent with steady growth momentum.

The Australian dollar has extended its run to the highest level since late October. Minutes from the RBA’s December meeting showed officials discussing the possibility of a rate hike in 2026 as inflation and labor market conditions are reviewed, with headline inflation at 3.8% in October still above target and fueling expectations of a February hike. Meanwhile, Australia’s 10-year bond yield stayed elevated around 4.741% with little daily change.