Pips for Breakfast: January 18, 2026

The White House decided Kevin Hassett won't be running the Fed, proving once again that the most dangerous place to be is the front runner for a government job.

On This Day

In 2018, the US Dollar Index decided to test how low it could go while Congress argued about keeping the lights on during a looming shutdown. It turned out the floor was much further down than the bulls expected, proving that political theater usually has a high ticket price for your margin account.

The Play

Short USD/CAD on the China deal: Canada just played a reverse card on global trade tensions by striking an EV and agriculture deal with Beijing. This is a massive relief valve for the Loonie. When markets open this evening, look for USD/CAD to drift toward 1.3420. The market hasn't fully priced in the "Canada is safe" narrative yet.

Long EUR/USD for the January Effect: The early-year rebalancing is in full swing and the US home builder sentiment just hit a brick wall at 37. If the Asian session tonight shows any USD fatigue, look for a move toward 1.1050. The January Effect historically rewards those who bet against the previous year's exhaustion.

What's on Deck

Asian Session tonight: We start with the fallout from Trump's comments on Iran and the Fed. Markets generally dislike "leadership by process of elimination," so expect the Dollar to be a bit sensitive as the hunt for a central bank boss continues.

The Week Ahead: It's a light calendar start, but watch the CAD crosses. The China deal is a structural shift for Canadian trade. Monitor AUD and NZD as they often hitch a ride on any positive China trade news, even if the deal didn't involve them.

The Data Behind the Patterns View Packages →

Quick Pips

GBP/USD: Cable is currently a passenger on the USD bus. Without fresh UK data, it's just wandering around the 1.2700 level looking for a reason to exist.
USD/JPY: Trump's "great respect" for the Iran situation might cool some geopolitical hedging. This could weaken the Yen if the "risk-off" crowd decides to take a nap.
Gold: Still hanging out near highs as the Fed leadership drama adds another layer of "maybe I should just buy shiny metal" to the institutional mindset.

Why Your P&L Cares

History likes to repeat itself, or at least rhyme poorly. In mid-January 2024, everyone was convinced the Fed would cut rates early. They didn't, and the Dollar proceeded to ruin everyone's first quarter. This year, we have the opposite problem. The data is a mess. Housing is sad, but industrial production is weirdly chipper.

The January Effect usually involves institutional funds moving billions of dollars to match their new year resolutions. This year, those resolutions seem to involve less USD exposure. The volatility we see this week isn't just noise. It is the sound of big money deciding that the "US exceptionalism" trade might finally be heading to a retirement home in Florida.

The Bottom Line

The Fed chair search is officially a reality show and Canada is making new friends in the East. Set your alerts for the 5pm open and watch the Loonie. Now go make some pips. You're fed.