In a significant update to its projections, the International Monetary Fund (IMF) released its latest World Economic Outlook report last Friday, increasing its forecast for global growth in 2025 to 3.3%. This marks a small uptick of 0.1 percentage points from the IMF's earlier prediction made in October of the previous yearFurthermore, the IMF left its growth forecast for 2026 unchanged at the same rate of 3.3%. This positive revision is primarily attributed to robust demand in the United States that exceeded expectations, alongside a noticeable decline in global inflation ratesThe easing of inflation has allowed central banks around the world to maintain their trend of interest rate cutsAmong the major economies, the U.Shas received the largest upward adjustment, with the IMF increasing its GDP growth prediction by 0.5 percentage points to 2.7%. However, this boost in the U.Soutlook has been largely countered by declining forecasts in several other regions

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For instance, the IMF expects the Eurozone to experience a mere 1% growth in 2025, while it maintains its 2025 growth forecast for emerging market economies at a more resilient 4.2%.

In a shift in monetary policy sentiment, traders in the swap market have rapidly increased their bets on the likelihood that the Bank of Japan (BOJ) will raise interest rates during next week’s policy meetingOn Friday, overnight index swap trading indicated a staggering 99% chance of a rate hike during the BOJ's meeting on January 23 and 24, a significant increase from 71% just days earlierYukio Ishiuki, a senior FX strategist at Daiwa Securities, stated, “It’s nearly certain now that the BOJ will raise interest rates next weekThe final hurdle is the U.Spolicy, but I believe the market won’t become extremely turbulent because of his inauguration speech.” On Friday, Japan's Finance Minister, Kato Katsunobu, expressed his expectation that the BOJ would appropriately implement monetary policy strategies to meet its inflation stabilization goals, while asserting that the specifics of the policy should remain solely within the purview of the central bank.

Attention today will be focused on several key economic indicators, including Germany’s Producer Price Index (PPI) for December and the Eurozone’s construction output for November.

On the commodities front, particularly regarding gold, the market witnessed fluctuations last Friday with gold prices experiencing a minor decline

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As of the latest trading, the gold-to-dollar exchange hovered around 2705. The downward pressure on gold can be partially attributed to profit-taking activities, along with a rise in the U.Sdollar index bolstered by positive economic data reported in the U.SNonetheless, expectations regarding potential interest rate cuts by the Federal Reserve in March help to limit the extent of the gold price declineToday’s trading sessions will spotlight the resistance level around 2720, while support is expected near the 2690 range.

Meanwhile, the forex market exhibited significant volatility with the USD/JPY currency pair last FridayThis currency pair has shown a noticeable trend of recovery, successfully reclaiming the pivotal 156.00 markBy the closing bell, the rate settled around 155.90. A noteworthy factor contributing to this ascent was short covering, where bearish investors bought back into the market to mitigate their losses, providing additional support to the exchange rate

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Moreover, bolstered by a series of positive economic indicators from the U.S., the U.Sdollar index surged and ultimately registered gainsGiven the USD’s dominant position in the USD/JPY pair, the upward movement in the dollar index served to propel the exchange rate higherHowever, the market harbors anticipation about a possible rate hike by the BOJ in March, which looms large and places a cap on the potential upward momentum in the exchange rateAnalysts recommend close monitoring of the resistance point around 157.00 in today’s trading; a breakthrough at this level could signal further bullish advancesConversely, if the price falls below the significant support level at 155.00, this may trigger a downward correction.

Regarding USD/CAD dynamics, the movements in the foreign exchange market last Friday drew significant attention, reflecting a broadly upward trend that pushed the pair toward the critical support level of 1.4500. By the end of the day’s trading, the USD/CAD was being exchanged around 1.4450. The reasons behind this upward trajectory are multifaceted

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