US: GOP Leader Thune Tees Up Monday Senate Vote On Housing Affordability Package

The January rate announcement statement highlights the outlook for the economy is "vulnerable" to "unpredictable trade policies and geopolitical risks", a slightly more dovish nod to downside risks vs the December statement that noted "resilience" in major economies (including Canada's). It also notably mentions the upcoming Canada-US-Mexico agreement as "a key source of uncertainty". A full comparison of the new statement to prior is in the image below.

• The BOC also downplays strong Q3 GDP growth, saying expansion "likely stalled" in Q4, while noting that the unemployment rate "remains elevated" and the outlook for hiring remains weak. Inflation is still seen close to the 2% target going forward as excess supply offsets trade-related price pressures.
• The concluding paragraph is tweaked slightly, but maintains the overall tone of uncertainty as expected, saying that "Monetary policy is focused on keeping inflation close to the 2% target while helping the economy through this period of structural adjustment. Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today. However, uncertainty is heightened and we are monitoring risks closely. If the outlook changes, we are prepared to respond. "
• Previously in December it said "If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. Uncertainty remains elevated. If the outlook changes, we are prepared to respond."

• Refreshing the MNI Tech Trend Monitor, Adding USDZAR, USDCNH and the e-mini S&P chart, while refreshing levels for Gold, USD/JPY, EUR/GBP, EUR/HUF, USD/MXN, the European Banking Stock Index (SX7E) as well as UK Gilts. 
• See full document here: https://media.marketnews.com/MNI_Tech_Trend_Monitor_Jan26_cef40b4ef1.pdf

Key chart focus - an update on the USD Index (DXY):

• This week’s sell-off in the USD has resulted in the break of a key support in DXY, at 96.22, the Sep 2025 low. 
• More importantly, the move down has also resulted in a break of a long-term trendline drawn from the May 2011 low.
• This month’s closing value will be key - a monthly close near January lows would signal a clear break of the trendline. 
• This would highlight a key medium-term (bearish) USD signal. 

Following are the Instant Answers for the Bank of Canada interest-rate decision:

• Overnight Rate Target 2.25%
• Does the Bank signal it is prepared to lower rates in the future? Yes. "Uncertainty around this outlook is unusually high. Geopolitical risks are elevated and the upcoming review of the Canada-United States-Mexico Agreement is an important risk to the outlook."
• Does the Bank say the policy rate appears appropriate if its economic forecast is realized? Yes
• Does the Bank signal it intends to leave rates on hold? Yes
• Does the Bank mention added risk from recent global geopolitical changes? Yes