Here’s what happened when the United States took that leap into the first week of January 2025. The broader context of these changes is profoundly affecting emerging perceptions and reality in global markets. Most importantly, both the Philadelphia Fed and New York Empire manufacturing indices came in well above expectations, pointing to stronger than expected industrial activity. These actions have really rocked the currency markets. Consequently, the US dollar has depreciated relative to other major currencies.
The United States and Taiwan recently signed a new semiconductor cooperation agreement. This deal represents an unprecedented opportunity to strengthen the tech sector and position the province to attract the next wave of major investment. Looking at this week’s economic indicators, it’s overall quite positive news that the UK has had a very large decrease in expected jobless claims. Moreover, GDP growth highlights the intricate and vibrant economic environment of the country.
Manufacturing Indices and Currency Fluctuations
This week, economic data released from the US showed unexpectedly strong performance in manufacturing. Both the Philadelphia Fed Index and New York Empire State Index came in higher than expected for the month of January. So, too, do these reports of a surprisingly resilient manufacturing sector that will help lay the foundation for longer-lasting economic growth to come.
Consequently, the strength of the US dollar went through quite a roller coaster ride. The EUR/USD currency pair sank closer to the 1.16-figure mark. This drop was due to softer US yields despite the manufacturing data beating expectations and sounding strong. The dollar was a touch weaker overnight, with USD/EUR trading just over 1.1610. At the same time, USD/JPY fell as Japanese Finance Minister Katayama condemned the recent weakening of the yen.
With such strong manufacturing indices out of the US, currency movements can be dramatic. This dramatic illustration of how localized economic performance drives international currency markets. Investors are watching these developments closely as they look to position themselves during a volatile time.
Trade Developments Between US and Taiwan
This week, the United States and Taiwan took a bold step with the signing of a trade deal whose centerpiece is the semiconductor industry. This agreement is designed to reinforce supply chains and encourage investment in semiconductor manufacturing. The deal cuts US tariffs on Taiwanese products to 15%. This strategic move significantly strengthens regional economic collaboration in the knowledge economy.
This historic deal is expected to establish more than USD 250 billion worth of Taiwanese investments into US chip manufacturing. At the same time, global demand for semiconductors is accelerating sharply. Through this partnership, we will increase domestic production capabilities and deepen the connection between our two economies.
This agreement provides enormous immediate economic benefits, but the implications of the deal stretch far beyond dollars and cents. It points to a developing recognition about how important domestic semiconductor manufacturing is for national security and technological competitiveness.
Global Economic Indicators and Trends
The week served as a reminder of the many signs of our global, and U.S. Closer to home, UK GDP growth rose to 0.3% M/M in November. At the same time, fourth quarter 2025 advanced projections are for a 0.2% annualized quarterly growth rate. Taken together, these figures paint a picture of a slow but continuing rebound in the UK economy.
In Sweden, inflation measures indicated that CPIF ex energy was at 2.3%, with full CPI at 0.3% YOY. These numbers offer a window into the economic wellbeing of communities as statewide leaders contend with the effects of inflation across the board.
At the same time, Germany just indicated that its economy will expand out of contraction at +0.2% YoY in 2025, on the back of booming private and government consumption. This sharp growth indicates a surprising degree of resilience in the German economy in the face of deeper malaise affecting all of Europe.
In Norway, the SSB industrial confidence indicator is increasing. It shows that manufacturers and firms are growing more confident in their outlook heading into Q1.
Over the Atlantic, US weekly jobless claims topped markets’ expectations on the positive side, with only 198,000 claims filed against an expected figure of 215,000. This number coming in a bit lower than expected is further evidence of a strengthening labor market, pointing in the direction of strong overall economic activity.