The euro remains supported by the ECB’s steady policy stance, rates holding near 2%, and improving eurozone external balances, keeping the currency close to its strongest levels since late September. Market focus now shifts to Germany’s import price data, expected to show easing inflation pressures, and Spain’s GDP and PPI releases, which are forecast to confirm stable growth alongside only moderate producer price inflation.

The yen has seen some choppy trading triggered by strong intervention warnings from Japan’s finance minister, who stressed the authorities’ freedom to act against speculative moves and noted shared understanding with the US on intervening during excessive volatility. The comments came as Japanese yields surged, with the 10-year JGB hitting a 27-year high near 2.1% on expectations of further BOJ tightening and heavy fiscal spending under a record budget. On the data front, Japan’s November machine tool orders are expected to show solid momentum, with year-on-year growth forecast at around 14%.

The Australian dollar has been better bid after the RBA minutes highlighted ongoing inflation risks and left the door open to further tightening in 2026, giving policy a mildly hawkish tone despite rates staying on hold. Support also came from steady Chinese rates and improved risk sentiment, though softer commodity prices and weak global demand remain a drag, with Australia’s commodity price index falling sharply year on year. Bond yields remain elevated and markets are increasingly pricing the risk of a rate hike later in the first half of the year.