A look at the day ahead in European and global markets from Rae

Wee

Markets in Europe will likely tread cautiously at the start

of trade on Friday with just one more day until U.S. President

Donald Trump's tariff decision day, when he is expected to make

good on his threat of import duties on Mexico and Canada.

The Mexican peso and Canadian dollar were

headed for weekly losses ahead of the impending weekend jolt,

while shares in Europe looked set to open on a dour note.

EUROSTOXX 50 futures were down 0.15% in the Asian session.

The yen, however, was on track for its best January

performance in seven years, buoyed by expectations that the Bank

of Japan will deliver further rate hikes this year, swimming

against the global tide of policy easing.

Technology companies will also be looking to end Friday on a

high, after a rout at the start of the week triggered by the

emergence of Chinese startup DeepSeek's low-cost artificial

intelligence model. The CEOs of Microsoft and Meta defended

their massive AI-related spending, saying it was crucial to

staying competitive in the new field.

Nasdaq futures were up 0.5%, after Apple ( AAPL )

executives forecast relatively strong sales growth.

But the big story for the markets on Friday was what may be

looming from Trump on Saturday.

The president on Thursday repeated a 100% tariff threat

against BRICS member countries to warn them off replacing the

U.S. dollar as a reserve currency, and is still "very much"

considering fresh tariffs on China for Saturday. That could put

a damper on Lunar New Year celebrations in the world's

second-largest economy.

Tariffs aside, markets will have preliminary inflation

readings from Germany and France to chew on later in the day.

The European Central Bank on Thursday left the door open to

further rate cuts, citing progress against inflation and worries

about a weak euro zone economy.

After that comes the release of December's core PCE price

index in the United States - the Federal Reserve's preferred

measure of inflation - which could provide further clues on the

central bank's rate outlook.

Barring a significant downside surprise, however, Fed

officials are likely to keep to their patient approach in easing

rates, as they had signalled earlier this week.

The diverging policy paths of global central banks has

emerged as a theme in recent weeks, suggesting policymakers are

likely to chart their own course in 2025.

Key developments that could influence markets on Friday:

- France preliminary CPI (January)

- Germany preliminary CPI (January)

- U.S. core PCE price index (December)