FirstFT: Dollar hits 2-year high as interest rate assumptions change

Good morning and welcome back to the second full working week of 2025. Keep your questions coming on the new administration for our planned special edition of FirstFT Americas. Here’s today’s agenda:

China’s trade surplus hits nearly $1tn

Donald Trump’s Ukraine plan

El Salvador’s reinvention

And 50 holiday ideas for 2025

The dollar hit a two-year high against major currencies today, with the pound the biggest faller, after strong US jobs data late last week led traders to slash expectations for further interest rate cuts by the Federal Reserve.

The US payrolls report on Friday showed 256,000 jobs were added in December, blowing past consensus estimates and casting “further doubts on the need for the Fed to keep lowering rates this year”, said one currency strategist.

The jobs figure from the Bureau of Labor Statistics exceeded the consensus forecast from economists polled by Reuters of 160,000 and was above the downwardly revised 212,000 positions added in November.

US stocks, which sold off on Friday after the data release, were poised to fall again at the Wall Street open, with S&P 500 index futures down 0.9 per cent and those for the tech-focused Nasdaq 100 down 1.3 per cent. Here are the latest market moves.

Here’s what else we’re keeping tabs on today:

California wildfires: Forecasters say heavy winds are likely to return in the coming days, raising fears that the fires could spread further. Drone footage shows iconic Los Angeles neighbourhoods have been reduced to ashes.

Blue Origin delay: The Jeff Bezos-backed company hoping to challenge Elon Musk’s SpaceX has delayed the inaugural launch of its new flagship rocket to deal with an unspecified issue with the vehicle.

Apple: The tech giant is set to begin a courtroom showdown in the UK over a £1.5bn class action suit, claiming that it levies “excessive and unfair” charges on software downloaded from its app store.

Israeli hostages: US and Arab mediators made significant progress overnight towards brokering a ceasefire in the Israel-Hamas war, officials said earlier today.

Join the FT in Davos as we provide live, on-the-ground analysis at the World Economic Forum’s annual meeting next week. Register here for updates.

Five more top stories

1. China’s trade surplus with the rest of the world reached a record of almost $1tn in 2024, official data showed today, only a week before Donald Trump is set to take office in the US with a vow to impose punitive tariffs on its biggest economic rival. The $992bn Chinese trade surplus, more than a third of which was with the US, is expected to fuel further tensions with Washington.

More on US-China tensions: Joe Biden’s administration is to propose a new export control regime that favours allies but makes it harder for China and other adversaries to get access to advanced technology.

China-Taiwan: China is building a new class of mobile piers, satellite images reveal, which could bolster its ability to land an invading force in Taiwan.

China’s economy: Chinese corporate profits are set to decline for the third consecutive year, as deflationary pressures weigh on the world’s second-largest economy.

2. US president-elect Donald Trump intends to push Ukraine to lower its age of conscription in an effort to stabilise the country’s front lines ahead of direct negotiations with Russia. Speaking on US network ABC News yesterday, Trump’s national security adviser gave the clearest picture yet of the new administration’s plan to end the war.

War in Ukraine: Russian forces are heading towards Ukraine’s Dnipro region, bypassing an anticipated heavy urban battle in the eastern Donetsk area.

Russian economy: The financial underpinnings of the country’s war economy increasingly look like a house of cards, writes Martin Sandbu.

3. Exclusive: Global companies are scrambling to strengthen their supply chains in the wake of Donald Trump’s win, with 85 per cent of the 1,700 large company executives surveyed by The Conference Board late last year saying they were planning to make significant changes to their supply chains. This is up 15 percentage points from last year and significantly higher than just after the Covid pandemic.

4. The UK will invest in a huge expansion of government-owned AI computing capacity over five years including building a new supercomputer as it seeks to establish a globally competitive artificial intelligence sector, ministers will announce today. Read the full story.

5. Mark Zuckerberg’s unexpected ‘free speech’ overhaul of Meta’s content moderation has sparked concerns among advertisers that it will lead to a surge of harmful content and misinformation across the social media platform. Here’s what multiple advertising bosses told the Financial Times.

Today’s big read

Since taking office in 2019 Nayib Bukele has transformed El Salvador from one of the most violent countries on earth to a place where investors want to put there money and governments want to engage. But his ambitions go far beyond making El Salvador safe. Using skills he learnt as an advertising executive he wants to rebrand the small central American country as a surfing haven and cryptocurrency paradise. But the makeover has come at a steep price, say Bukele’s critics.

We’re also reading . . . 

Brian Moynihan: Bank of America’s chief executive talks about Donald Trump and his friendship with King Charles in this interview with the FT.

Zuckerberg’s cravenness: The man in charge of social media platforms used by billions should show some moral courage, writes Jemima Kelly.

Employment: What US workers can expect from Donald Trump’s second term? Claire Bushey and Taylor Nicole Rogers report.

Chart of the day

The price of uranium, the fuel for nuclear reactors, has surged to a record high as demand from artificial intelligence data centres exacerbates a squeeze on the market following Russia’s invasion of Ukraine. Executives and analysts say the issue is likely to be exacerbated by the expiry of a US waiver for importers at the end of 2027. That push has put pressure on the industry to find new facilities that can convert uranium into the pellets that go into nuclear reactors.

Take a break from the news . . . 

This morning we have some holiday ideas from FT travel writers, including Sahara desert tours in Algeria, which following the division of Sudan in 2011, has become Africa’s largest country and since 2023 has eased the visa process for those coming with a tour operator. Here are 50 holiday ideas for 2025.