‘Weather Bomb’ Causes Fall in UK Wholesale Energy Prices

Energy

Summary:

Gusts of up to 80mph may bring disruption but also a surge in cheap wind power after days of near-zero output.

A looming “weather bomb” is expected to snuff out a surge in wholesale energy prices after windfarms produced the lowest levels of electricity since September 2023.

Cloudy and still weather has caused Great Britain’s renewable energy output to fall to near zero this week but is expected to give way to gusts of up to 80mph, alongside heavy rain and snow, on Thursday and Friday.

The rapid onset of the “weather bomb” is expected to raise the risk of travel disruptions and damage caused by flying debris – but it will also lead to tumbling wholesale electricity prices by causing cheap wind power to surge 40-fold in 48 hours.

Britain’s wind power output fell to just above zero on Wednesday, which, combined with the cold, dark weather, caused the market price for electricity to climb to almost £250 per megawatt-hour at auction, or almost seven times the average price before the pandemic.

The sudden drop-off in renewable energy due to dull windless winter weather, known as dunkelflaute in German, has also forced the system operator to pay gas power stations more than £500/MWh to run on Wednesday evening when household demand is expected to reach its peak.

The weather conditions–the third dunkelflaute of the winter so far – left Britain’s electricity grid reliant on gas-fired power stations. They accounted for more than 70% of power generation at points on Wednesday.

However, electricity prices for Thursday and Friday have fallen by more than half, to £107/MWh and £84/MWh respectively at auction, as wind power is forecast to surge from 0.4GW to 16GW by Friday morning.

The whipsaw in available renewable energy has reignited calls for the UK to invest in so-called “long-duration energy storage” to set aside clean electricity when it is available to power the grid when it is scarce.

A select committee of MPs on Wednesday heard that long-duration storage, which includes pumped hydropower, was one of three vital steps required to meet the government’s target to run a clean power system by 2030.

The UK’s energy system operator estimates that it will need to grow by more than fivefold to between 11GW to 15GW by 2030 to help manage the fluctuations in renewable energy. Deploying 20GW could save the electricity system £24bn by 2050, and reduce household energy bills by cutting Britain’s reliance on expensive natural gas, according to the government.

Akshay Kaul, a director at Ofgem, the energy industry regulator, said: “We’ve seen this winter that when you have a period of still, cold, cloudy weather [that] batteries on their own, and [power] interconnectors on their own, are not sufficient.”

The regulator was setting up a new funding framework to attract private capital into long-duration energy storage “and get these assets built by 2030”, Kaul said.

“That is quite a considerable challenge to physically get things like big pumped hydro storage built. But we relish it, we’re up for the challenge,” he added.

Barnaby Wharton, a director at RenewableUK, a trade association, said: “A modern energy system which maximises the use of wind and solar offers the best deal to consumers as they are our cheapest forms of new power and they protect us from spikes in international gas prices.

“Of course we need to continue to build resilience and flexibility in the system, so it continues to operate during periods of lower wind and solar at the cheapest cost for billpayers.”

Source:the guardian

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Glendon

Economic

Forex

The NZD/USD pair soars slightly above the key level of 0.5700 in Friday’s European session. The Kiwi pair strengthens amid an improvement in appeal of antipodeans after comments from United States (US) President Donald Trump in an interview with Fox News on Thursday signaled that the nation could reach to a deal with China without using tariffs.

Donald Trump said that he discussed an array of issues with China, including TikTok, trade, and Taiwan before returning to the White House. He added, "It was a good, friendly conversation,” and a trade deal can be achieved “without exercising tariffs”.

During the inauguration ceremony, Trump threatened to impose 10% tariffs on China and 25% on Mexico and Canada.

Trump’s soft tone with China has improved the New Zealand Dollar’s (NZD) appeal, given that New Zealand (NZ) is one of the leading trading partners of China.

Meanwhile, Trump’s friendly talk with China has diminished risk premium of the US Dollar (USD), which had a strong run in last few months. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles to near 107.55, the lowest level in almost a month.

The Greenback has also faced selling pressure from Trump’s speech at the World Economic Forum (WEF) in Davos, in which he endorsed the need for immediate interest rate cuts. With oil prices going down, I'll demand that interest rates drop immediately, and likewise, they should be dropping all over the world," Trump said.

Trump’s comments are unlikely to impact the Federal Reserve’s (Fed) monetary policy stance, as the Fed is an independent body.

Source: FXSTREET

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Cohen

Economic

It is unclear if he will carry out these threats, which are either Trump’s characteristic bluster or a negotiating tactic. The most likely threat to materialise is the tariff on China, as it is the most repeated and would have bipartisan support. It will also have the largest impact on Southeast Asia.

The proposed tariffs of 60 per cent on China are significantly higher — double or triple — than the tariffs imposed by Trump in his first term. The effective rate of these new tariffs would exceed the proposed nominal rates due to a multiplier effect where value is added at multiple destinations across global supply chains.

While the tariff is imposed on the import’s total value, it is triggered by the share of value added in China. The average share of value added in manufacturing for so-called ‘Made in China’ exports is about one-third. The tax on adding value in China — represented by the effective tariff — is about three times the nominal rate, or 180 per cent.

This means that production is likely to shift out of China to alternative sites like Vietnam or Thailand if the same activities can be undertaken at no more than 180 per cent of the cost in China. This represents a significant incentive for producers to remove China from the supply chain.

Former president Joe Biden not only retained the original Trump tariffs but also expanded their scope and introduced a host of potent non-tariff measures, including export controls and subsidies. Three rounds of mostly cumulative punitive measures have been implemented, with the most recent and comprehensive package denying 140 Chinese entities access to US technology to further arrest the development of China’s chip-making industry. China was quick to retaliate by banning exports of critical raw materials, including gallium and germanium, to the United States.

These are worrying signs for Southeast Asia. Malaysia, Singapore and Thailand are key players of the China-centred regional electronics supply chain, and the Philippines and Vietnam play important roles at the assembly end. The escalation in US–China tensions has seen Chinese and foreign firms shift operations from China to Southeast Asia. Trump’s return to the White House will further affect the restructuring.

As the trade war escalates, the likelihood of bifurcation of supply chains also increases. Trump is likely to target firms based on their nationality rather than their location, continuing a trend in the last package of punitive measures by Biden on China. This shift towards nationality is behind Trump’s push to bring forward the renegotiation of the trade deal with Canada and Mexico. If these measures are implemented effectively, then any geographical reconfiguration of supply chains to circumvent these punitive measures will no longer work. As the incentive to engage in costly relocation diminishes, the prospect of bifurcation increases.

This could lead to duplicate supply chains for targeted goods — one for the United States and markets like the European Union that penalise value-adding in China, and one for everyone else. The trade war would create the need for a supply chain that is engineered purely to bypass tariffs, even though having just one supply chain is the most efficient. In this scenario, Chinese firms would no longer invest in Southeast Asia just to bypass tariffs but foreign firms in China could still shift to Southeast Asia.

If China retaliates with matching measures, which is likely, this could lead to further fragmentation of supply chains. China is an important enough market for a separate supply chain to be configured, without US or European value added, to avoid retaliatory measures. Many products already involve multiple supply chains, but when the duplication is driven by policy distortions, it becomes costly and inefficient.

The question facing Southeast Asia and other regions is whether these supply chains can operate either without China or without the United States and European Union.

The answer depends on the sector. As the largest trading nation, China is deeply immersed in global manufacturing supply chains. It would be difficult and costly to completely remove China from a production process. Some goods cannot be produced at all or in the desired quantities without China because China is the only or main supplier of a critical input. One such case is rare earths. The same could be said for the United States with its export restrictions on superfast chips. Many products will still be produced by one supply chain, but prices will increase because of the tariffs.

The Trump tariffs could lead to an all-out trade war, as happened in 1930 when the United States unilaterally raised around 900 tariffs by about 40–60 per cent. This prolonged the Great Depression and by 1934, world trade had contracted by a startling 66 per cent. There is no reason to expect a different outcome this time around.

Source：Eastasiaforum

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Owen Li

Economic

Bloomberg senior ETF analyst Eric Balchunas flagged the accelerated timeline after fellow analyst James Seyffart revealed Miami-based REX Shares’ ETF filings on Tuesday.

REX Shares has filed proposals for DOGE and TRUMP ETFs, alongside Bonk (BONK), Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and XRP (XRP).

If they're greenlit, these ETFs could bridge meme coins and traditional finance by giving investors access to internet-born cultural icons through standard brokerage accounts.

“These are '40 Act filings and so (theoretically, if they aren't disapproved) could hit the market in early April...” Balchunas wrote on X.

He was referring to the 1940 Act, which governs funds combining assets and derivatives. Filings submitted under the Act also enjoy a streamlined 75-day review process.

By leveraging this process, DOGE and TRUMP ETFs could leapfrog other filings—like XRP and Solana ETFs—which require a cumbersome 240-day timeline under 19b-4 filing rules.

“The crypto market survives on the principles of innovation and cultural relevance,” Saravanan Pandian, CEO of KoinBX, told Decrypt. “Dogecoin, with its ever-growing adoption, and the emergence of meme-driven financial instruments, reflect a shift in how the new generation interacts with investments.”

Pandian sees tremendous potential in the meme coin ETFs, “I agree that a Dogecoin ETF could arrive earlier than expected if the regulatory landscape aligns, and we could see these trends formalized as early as April, sparking new opportunities in the digital asset space.”

Dogecoin, once a tongue-in-cheek creation from 2013, has grown into a global crypto heavyweight, driven by strong liquidity and cultural clout.

Endorsed by figures such as Tesla CEO and the Department of Government Efficiency (DOGE) head Elon Musk, the coin has consistently dominated meme coin trading volumes.

As with TRUMP, the meme coin inspired by the sitting U.S. President Donald Trump, has quickly climbed the ranks, currently trading at $43.24—up 21.1% in the last 24 hours, according to Coingecko data.

Litecoin has also seen renewed interest following Canary Capital’s amendment to its S-1 registration with the SEC earlier this month.

Balchunas and Seyffart noted that these updates, often indicative of regulatory engagement, suggest momentum toward approval.

Regulatory Shifts Bring Optimism for Meme Coin ETFs

The U.S. Securities and Exchange Commission (SEC) is undergoing significant leadership changes, with pro-crypto Acting Chair Mark Uyeda stepping in following Gary Gensler’s resignation.

Uyeda’s arrival has sparked hope across the crypto industry for a more favorable approach toward innovative crypto products, including the proposed meme coin ETFs.

The inclusion of TRUMP meme coin in these filings presents a unique challenge for the regulatory agency as it raises questions about how the SEC will handle a product tied to the President’s meme coin.

"While Trump memecoin saw a brief dip in prices yesterday, I am positive the Trump ETF will happen soon, owing to his position as the President of the United States of America,” Pandian stated.

Source:cryptonews

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Michelle

Economic

Forex

USD/JPY Technical Analysis

The US Dollar found support at 154.80 against the Japanese Yen. USD/JPY surpassed 155.50 and 155.80 to enter a positive zone.

Looking at the 4-hour chart, the pair was able to clear the 38.2% Fib retracement level of the downward move from the 158.87 swing high to the 154.77 low. It cleared the 200 simple moving average (green, 4-hour) and traded close to the 100 simple moving average (red, 4-hour).

On the upside, the pair seems to be facing hurdles near the 156.80 level. It is close to the 50% Fib retracement level of the downward move from the 158.87 swing high to the 154.77 low.

The next major resistance is near the 157.30 level. A close above the 157.30 level could set the tone for another increase. In the stated case, the pair could even clear the 158.00 resistance.

On the downside, immediate support sits near the 155.80 level. The next key support sits near the 155.50 level. Any more losses could send the pair toward the 155.00 level.

Looking at GBP/USD, the pair started a short-term recovery wave but the bears might remain active near the 1.2400 resistance.

Source: ACTIONFOREX

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S&P Global Inc.

Data Interpretation

January 24 S&P PMI Data Highlights:

Manufacturing PMI (preliminary): 49.8, a 12-month high (previous: 47.8).

Services PMI (preliminary): 50.4, a 6-month low (previous: 50.8).

Composite PMI (preliminary): 50.3, a 5-month high (previous: 50.2).

The latest PMI report shows the Composite Output Index at 50.3, marking a fourth consecutive month of marginal growth in private sector output. Signs of gradual economic recovery align with a robust labor market, where unemployment remains at a low 4.0% with strong employment growth. End-of-year promotions and tax cuts have also boosted consumer spending.

Services Sector:

The Services PMI fell to 50.4 in January from 50.8 in December, reaching a 6-month low but remaining in expansion territory. Growth was supported by increased overseas sales and rising demand. However, employment declined for a second consecutive month, easing capacity pressures. Rising material, transportation, and wage costs drove input prices to their highest levels since September 2024, pushing output price inflation to a 6-month high. Despite uncertainty around interest rates and inflation, optimism in the services sector remains intact.

Manufacturing Sector:

The Manufacturing PMI rose to 49.8 in January from 47.8 in December, its highest level in over a year, approaching expansion territory. After 13 months of contraction, manufacturing activity is stabilizing. Renewed business confidence has led some firms to resume hiring and return to profitability, with production recovering gradually. However, export orders continued to decline, and new business volumes fell slightly. The sector still faces challenges with layoffs and inventory reductions, though downward pressure has eased overall. Rising input costs pushed sales prices higher, while persistent supply chain issues weighed on operations.

Inflationary and Operational Challenges:

Economic activity in January showed recovery signals, but inflationary pressures intensified. Average input costs rose at a faster pace, pushing output prices to a 6-month high. Supply chain bottlenecks, higher transportation costs, and increased raw material prices further squeezed profit margins. Employment in both manufacturing and services sectors declined, reflecting cautious hiring amid fluctuating demand.

Outlook:

While performance in the services and manufacturing sectors has improved, overall business confidence in the private sector has dipped compared to December. High interest rates and persistent inflation remain key concerns, along with weak overseas demand and ongoing supply chain disruptions. Nevertheless, with inflation easing and potential rate cuts on the horizon, economic recovery is expected to gain further momentum.

Australia January PMI

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Owen Li

Economic

In focus today

He is expected to issue several executive orders building on his current momentum, leading to US news continuing to dominate the headlines as markets and world leaders alike are left navigating the implications.

In the euro area, we receive consumer confidence data for January, which will be very interesting. Following a continuous upward trend over the past two years, consumer confidence declined in both November and December. Since private consumption is anticipated to be the primary growth driver this year, consumer sentiment will be crucial for the economic outlook.

Norges Bank (NB) is highly expected to stay on hold at 4.5% today and signal that the first rate cut will most likely be delivered in March. December’s core inflation likely relieves NB after November’s spike, indicating continued disinflation. However, global rates, NOK, and oil prices suggest upside risk to December’s rate path. NB is expected to remain vague on the outlook beyond March.

Overnight in Japan, we will receive both CPI and PMI data for December ahead of the Bank of Japan meeting early morning. Tokyo inflation data indicates price pressures have eased a bit in December. The economic recovery has been on track for a while and inflation close to target. We expect the BoJ will hike its policy rate by 25bp, which is also largely priced in by investors now.

Economic and market news

What happened yesterday

In the US, President Trump told Russian President Putin to reach a deal in Ukraine or be faced by increased sanctions from the US. This marks the first comment by the president on the war in Ukraine. Overnight Trump halted more than USD 300bn in US green infrastructure funding, while paving the way for a USD 500bn private-sector investment in AI infrastructure. He also disclosed that his administration was currently discussing a 10% tariff on China, as well as saying the EU will get tariffs due to a “troubling” trade surplus with the US.

Equities: Global equities rose yesterday, marking the seventh consecutive day of gains, with the MSCI World Index reaching a new all-time high. This is noteworthy given the widespread caution and predictions of volatility surrounding the inauguration of the US president, which have not materialised. Instead, there has been a steady increase, and those who reduced risk beforehand would have missed out on a 4% equity return, equivalent to half a year’s average return in just seven days. This could serve as a reminder of not being too cautious about underweighting risk during periods when macroeconomic, microeconomic, and monetary policies are highly supportive, even when political issues dominate 90% of the media coverage.

In the US yesterday, the Dow was up by 0.3%, the S&P 500 by 0.6%, the Nasdaq by 1.3%, and the Russell 2000 was down by 0.6%. This morning presents a mixed picture in Asia. Earlier, Chinese stocks performed better following comments about increased public support for the equity markets, but this effect has since faded. US and European futures are slightly lower this morning.

FI: There was modest movement in global bond yields yesterday as 2Y and 10Y US Treasuries rose a few bp. In the European market there was also modest movement in bond yields. 2Y and 10Y German government bonds also just moved a few bp. Furthermore, the spread between the semi-core vs. Germany as well as periphery vs. Germany continue to tighten. Hence, the 10Y Italy vs. Germany spread is close to breaking through 100bp, while the 10Y French vs. German 10Y yield spread has stabilised and is slowly moving towards the 70bp-level. Finally, the Bund ASW-spread has also been rangebound at 0bp to -2bp.

FX: NOK rose and JPY lost ground yesterday ahead of monetary policy decisions from Norges Bank and Bank of Japan with the latter set to hike interest rates tomorrow. EUR/USD was steady yesterday just above 1.04.

Source:action forex

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‘Weather Bomb’ Causes Fall in UK Wholesale Energy Prices

Source:the guardian

NZD/USD Surges to Near 0.5700 on Trump’s Friendly Talk With China

Source: FXSTREET

Southeast Asia at the Crossroads of Trump Tariffs 2.0

Source：Eastasiaforum

Dogecoin and Trump ETFs Could Arrive by April: Analysts

Bloomberg senior ETF analyst Eric Balchunas flagged the accelerated timeline after fellow analyst James Seyffart revealed Miami-based REX Shares’ ETF filings on Tuesday.

Source:cryptonews

USD/JPY Increase on Hold: Here’s Why The Pair Could Struggle

USD/JPY Technical Analysis

Source: ACTIONFOREX

Australia January PMI: Signs of Economic Recovery Emerge as Private Sector Activity Gains Momentum

January 24 S&P PMI Data Highlights:

Services Sector:

Manufacturing Sector:

Inflationary and Operational Challenges:

Outlook:

Markets Eye Tariffs on the Horizon

In focus today

Economic and market news

What happened yesterday

Source:action forex

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