Most Asian currencies traded within narrow ranges on Tuesday, while the U.S. dollar weakened as President Donald Trump’s renewed demands over Greenland dampened appetite for U.S. assets.
Regional markets showed little response to China’s decision to keep a key lending rate unchanged, as expected, while the Japanese yen was steady after Prime Minister Sanae Takaichi called a snap election for early February.
A U.S. market holiday on Monday limited overnight signals, leaving Asian markets broadly risk-averse after President Trump announced tariffs on Europe over Greenland over the weekend.
Japanese yen little changed ahead of snap vote and BOJ meeting
The Japanese yen weakened slightly on Tuesday, with USD/JPY slipping 0.1%, though the pair remained near recent highs amid a lack of strong supportive signals for the currency. Prime Minister Sanae Takaichi said on Monday that she will dissolve Japan’s lower house this week and call a snap election for February 8.
With Takaichi enjoying solid approval ratings, the early election is expected to strengthen her mandate for additional fiscal stimulus. However, markets questioned the scope for further government spending, as Japanese government bonds extended their selloff, which in turn pressured the yen.
The election announcement also comes ahead of a Bank of Japan policy meeting on Friday, with investors divided over whether the central bank has sufficient momentum to raise interest rates again.
The central bank raised interest rates at its final meeting of 2025 and signaled that further hikes would be driven by sustained gains in inflation and wages. However, the BOJ may pause before tightening again until it gains clearer insight into Japan’s spring wage negotiations, scheduled for March–April.
Dollar under pressure as Trump–Greenland tensions persist
The dollar index and its futures slipped about 0.1% in Asian trading, as the greenback faced pressure from growing caution toward U.S. assets amid President Trump’s push to acquire Greenland.
European leaders largely rejected Trump’s tariff threats and reiterated that Greenland should remain part of the Kingdom of Denmark. Trump on Monday renewed his demands for the island and declined to rule out the use of military force.
The U.S. president is now set to attend the World Economic Forum in Davos, Switzerland, where he may hold discussions with European leaders on the Greenland issue. Asian currencies remained mostly subdued amid broader risk aversion linked to Trump’s Greenland stance.
The Chinese yuan saw USD/CNY edge slightly lower, showing little response to the People’s Bank of China’s decision to leave its loan prime rate unchanged. The currency, however, stayed near its strongest levels in two and a half years after a series of firm midpoint fixings by the PBOC. Elsewhere, USD/TWD rose 0.3%, while AUD/USD gained 0.3%, with the Australian dollar supported by the softer U.S. dollar.
The South Korean won weakened slightly, with USD/KRW rising 0.2%, while the Singapore dollar also softened as USD/SGD added 0.1%. The Indian rupee saw USD/INR edge up 0.1% and hover near the 91-per-dollar level, as growing concerns over the health of India’s economy weighed on the currency.
Gold prices surged beyond $4,800 an ounce on Wednesday, hitting a fresh record as rising tensions surrounding Greenland and renewed trade disputes unsettled global markets, prompting investors to seek refuge in safe-haven assets.
Spot gold advanced 1.7% to an all-time high of $4,844.39 an ounce by 21:13 ET (02:13 GMT), extending a powerful rally that has seen bullion notch multiple record highs this month.
Meanwhile, U.S. gold futures rose 1.3% to $4,830.04 per ounce. Gold has gained more than 5% so far this week, including Wednesday’s advance, as geopolitical tensions continue to underpin safe-haven demand.
The latest rally comes amid ongoing strain in U.S.–European relations over Greenland’s strategic significance. U.S. President Donald Trump has stated there is “no going back” on Greenland, citing Arctic security concerns, and has warned of potential tariffs on European nations—adding to market anxiety already heightened by global trade risks.
In response, French President Emmanuel Macron said Europe would not yield to “bullies,” emphasising that mutual respect and cooperation—not pressure—should guide relations between allies. Speaking on the sidelines of the World Economic Forum in Davos, Macron’s comments highlighted growing European unease over Washington’s rhetoric and trade threats linked to the Greenland issue.
Although Trump attempted to ease concerns by saying the U.S. was working toward a solution acceptable to NATO, investor caution has persisted.
Demand for gold was further supported by a weaker U.S. dollar, which fell roughly 0.8% on Tuesday to its lowest level in two weeks. The U.S. Dollar Index remained under pressure during Asian trading on Wednesday, slipping a further 0.2%.
A softer dollar typically boosts gold by making the metal more affordable for holders of other currencies, increasing demand for the non-yielding asset.
Elsewhere in the precious metals complex, silver prices dipped slightly to around $93.9 per ounce after reaching a record high of $95.87 per ounce on Tuesday. Platinum also touched a fresh all-time high of $2,519.51 per ounce on Wednesday before giving back gains, last trading about 0.6% lower at $2,450.9 per ounce.
Few analysts had a U.S. invasion of Greenland anywhere near the top of their 2026 market outlooks. President Trump’s surprise weekend tariff move has triggered a classic risk-off reaction, with gold rallying around 2%, equities down 1.0–1.5%, and the dollar coming under modest pressure. This week’s World Economic Forum in Davos is now set to become a focal point for U.S.–European diplomacy, with elevated FX volatility likely.
USD: Too Early to Embrace the ‘Sell America’ Narrative
Washington escalated its pursuit of Greenland over the weekend, with the threat of 10% tariffs—potentially rising to 25%—on eight European countries appearing consistent with a broader “maximum pressure” strategy to force a deal. Political commentary in Europe suggests this could mark the end of the EU’s long-standing policy of accommodation toward the U.S., with France emerging as a key advocate for deploying the EU’s Anti-Coercion Instrument, which allows for retaliatory measures spanning tariffs, taxation, and investment restrictions against coercive trade actions.
The issue, alongside growing concerns about strains within NATO, is set to dominate the policy agenda in a week that might otherwise have focused on Ukraine. President Donald Trump is scheduled to speak at the World Economic Forum in Davos on Wednesday, followed by an EU leaders’ meeting on Thursday. A central question is whether Europe adopts China’s approach from last year—matching U.S. tariffs one-for-one—to ultimately force a de-escalation from Washington.
Initial market reactions have been cautious but telling: gold has gapped roughly 2% higher, German DAX futures are down around 1.5%, and the U.S. dollar is marginally weaker. While U.S. cash markets are closed for the Martin Luther King Jr. holiday, S&P 500 futures are indicating losses of about 0.8%. Still, it may be premature to revive the “Sell America” narrative. As with last April’s near-50% “Liberation Day” tariff threats, investors appear reluctant to chase what often proves to be aggressive rhetoric that ultimately gives way to diplomatic negotiation.
Nonetheless, these developments are likely to inject a degree of volatility into what has otherwise been a relatively calm investment environment. On the broader “Sell America” theme, we noted on Friday that there was little concrete evidence of meaningful de-dollarisation last year. Even in a scenario where geopolitical tensions were to escalate materially, it appears unlikely that the dollar would experience a sell-off on the scale of last year’s near-10% decline, particularly given that the buy-side was then unusually under-hedged in U.S. dollar exposure.
Beyond the Greenland issue, this week may also bring clarity on the future leadership of the Federal Reserve. President Trump could announce his nominee to succeed Jerome Powell as Fed Chair. The dollar rallied on Friday after reports suggested Trump wants Kevin Hassett to remain at the National Economic Council, with Kevin Warsh now viewed as the leading candidate—an outcome that would be modestly supportive for the dollar if confirmed.
Overall, U.S. economic data are likely to take a back seat to political developments in the coming days. In the near term, the dollar may probe lower levels. For DXY, gap resistance around 99.35 could cap upside, while a corrective move toward the 98.80–98.85 zone remains the mild tactical bias.
EUR: Unwelcome Developments
The renewed tensions surrounding Greenland and the prospect of fresh tariffs are particularly negative for European industry. This comes just as industrial confidence had begun to recover, with firms appearing to have adapted to last year’s tariff-related volatility. The latest developments are likely to sharpen the focus among European policymakers on boosting domestic demand and may even add momentum to long-delayed reforms such as the Savings and Investment Union, aimed at strengthening Europe’s capital markets and enhancing their competitiveness relative to the U.S.
In FX markets, EUR/USD has established support just below 1.1600. Initial intraday resistance is seen near 1.1650, with scope for a move toward the 1.1690–1.1700 area if that level is cleared. Short-dated implied volatility for EUR/USD, both one-week and one-month, has edged higher, reflecting the elevated uncertainty surrounding the week ahead.
GBP: Poised for Relative Outperformance This Week
We believe this week’s U.K. data — November employment figures and December CPI — may offer modest support to sterling, potentially extending the short-covering rally that has been underway since late November. While EUR/GBP was initially seen as the more vulnerable cross, with downside risks toward 0.8600, early-week dollar softness could shift the bulk of the move into GBP/USD. A sustained break above the 1.3415–1.3420 zone would open scope for a move toward 1.3450–1.3460.
That said, sterling historically underperforms during pronounced risk-off phases, and the current environment remains fluid with multiple cross-currents at play.
Silver remains within a clearly defined VC PMI probability structure, consolidating around the Daily VC PMI mean near the $89.25 area. This zone represents the market’s equilibrium level, where directional momentum is established. A sustained close above the mean would trigger bullish momentum, statistically favoring a move toward the Daily Sell 1 level near $91.94, followed by the Daily Sell 2 region around $95.33.
These upside targets also align with Square of 9 harmonic resistance levels, implying that any rally into these zones could be accompanied by heightened volatility and increased profit-taking.
Time-cycle analysis points to a near-term inflection window between January 18 and 20, followed by a secondary momentum window from January 27 to 30. These periods align with current Square of 9 price geometry, where 45-degree and 90-degree harmonic rotations from the recent swing low intersect with the Daily and Weekly VC PMI bands.
Historically, when these time and price relationships converge, markets tend to experience either an expansion in momentum or a corrective pause ahead of the next directional move.
On the downside, corrective phases remain brief and shallow, underscoring a structurally supported trend. The Daily Buy 1 level near $85.86 and Daily Buy 2 around $83.17 mark high-probability accumulation areas, where the VC PMI model assigns a 90–95% likelihood of mean reversion back toward the daily equilibrium. These levels are further supported by the Weekly VC PMI mean near $87.40, which continues to function as dynamic support within the broader trend framework.
From a higher-timeframe perspective, the Weekly Sell 1 level near $94.89 and Weekly Sell 2 around $101.25 represent the next key upside reference points should daily bullish momentum evolve into a sustained trend. A weekly close above both the daily and weekly means would confirm a structural shift, clearing the way toward these upper harmonic targets derived from Square of 9 geometry and Fibonacci extensions.
It’s been a long, cold and snowy weekend in New York—just enough snow to keep most people glued to the couch. For anyone hoping for a brief break from markets, U.S. trading is closed on Monday.
For committed market watchers, however, Weekend Wall Street and Weekend Tech offer little comfort. Both have been under pressure following the latest developments around Greenland, with Weekend U.S. Tech CFDs down roughly 75 basis points as of 8:30 a.m. ET on Sunday. While this move is not definitive, it suggests futures could open lower when trading resumes Sunday evening at 6:00 p.m. ET.
Attention also turns to Tuesday, when the Supreme Court may issue another opinion. Given how volatility was priced on Friday, it would not be surprising to see overnight volatility dynamics re-emerge, potentially pushing implied volatility higher into the 10:00 a.m. release window.
Tuesday also marks a $14 billion Treasury bill settlement, which is expected to tighten liquidity conditions further. As a result, the session could be eventful from the outset. If overnight funding rates begin to climb this week, pressure on usage of the Federal Reserve’s Standing Repo Facility would likely increase, with the key threshold for the overnight rate seen above 3.75%.
From my perspective, the technical setup in the S&P 500 looks fragile. The index appears likely to be in negative gamma when trading resumes on Tuesday, which could further amplify volatility. The rising wedge pattern remains intact, and a decisive break below the 6,900 support level would raise the risk of a more pronounced pullback.
Ten-year Treasury yields broke higher on Friday, and much of that move may have been linked to the quarterly refunding questionnaire sent to primary dealers later in the afternoon. The most notable steepening in the yield curve occurred in the belly, which would be consistent with speculation that the Treasury is considering shifting the 7-year note from a monthly new issue to a quarterly issuance with two reopenings.
This suggests the Treasury could be preparing the market for potential adjustments to issuance size or duration in the near to medium term, though that view remains speculative. Notably, yields rose most sharply in the 5- to 7-year sector, reinforcing this interpretation.
Had the move instead been driven by expectations around Kevin Hassett no longer being considered for Fed chair, yields would likely have increased more at the front end of the curve.
Regardless of the catalyst, the key point is that the 10-year yield has broken out in a meaningful way, suggesting that a move higher may now be unfolding. While confirmation on Tuesday will be important, it is clear that market dynamics have shifted.
Futures tied to major U.S. stock indexes fell after President Donald Trump raised the prospect of imposing tariffs as part of his push to acquire Greenland. European leaders discussed possible retaliation against the measures, which they described as a form of blackmail. Gold climbed to a fresh record high, while oil prices edged lower as traders assessed Trump’s remarks and the EU’s response. Elsewhere, China’s economic growth slowed in the fourth quarter but still met Beijing’s 2025 target.
U.S. futures and global stocks decline
U.S. stock futures pointed lower on Monday as investors weighed President Donald Trump’s threat to impose tariffs on several European countries until the United States is allowed to acquire Greenland.
By 03:05 ET (08:05 GMT), Dow futures were down 404 points, or 0.8%, S&P 500 futures had fallen 66 points, or 1.0%, and Nasdaq 100 futures were off 336 points, or 1.3%.
With U.S. cash markets closed for the Martin Luther King Jr. Day holiday, the immediate reaction to Trump’s latest tariff threat will be delayed. Risk-off sentiment has spread globally, dragging equities lower across Europe and Asia.
ING analysts said Trump’s comments, following last year’s sweeping global tariffs, have pushed trade tensions into “an entirely new dimension,” driven less by economic considerations and more by political motives. They added that while past experience suggests caution in reacting to dramatic announcements, some of Trump’s threats over the past year have ultimately been carried out.
Focus on Trump’s Greenland tariffs
European leaders agreed on Sunday to intensify efforts to counter President Donald Trump’s tariff threats, with reports suggesting EU officials are considering strong retaliatory measures if the levies are imposed.
On Saturday, Trump said he would introduce 10% tariffs on exports from eight European countries—Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the United Kingdom—until the United States is able to acquire Greenland. He added that the tariffs would be raised to 25% if the purchase of the semi-autonomous Danish territory does not go ahead. Trump has framed the move as a national security necessity, a claim European governments have rejected, describing it as blackmail.
Ahead of an emergency EU summit in Brussels on Thursday, member states are expected to debate a range of responses, including a potential €93 billion tariff package on U.S. imports and the possible use of the bloc’s “Anti-Coercion Instrument,” which could restrict U.S. access to investment, banking and services markets. Reuters, citing an EU source, reported that the tariff package currently has broader backing.
Trump’s latest tariff threat has also cast doubt over the future of a U.S.–EU trade agreement reached last year, with EU officials saying they cannot approve the deal while Washington pursues control of Greenland. ING analysts said that while the outcome of the dispute remains uncertain, it underscores the lack of predictability in global trade and tariff policy.
Gold reaches record high
Gold prices climbed to record highs in Asian trade on Monday, nearing $4,700 an ounce, as investors rushed into safe-haven assets following President Trump’s latest tariff threat.
Spot gold rose 1.6% to $4,667.33 an ounce by 02:26 ET (07:26 GMT), after earlier touching a record $4,690.75. U.S. gold futures also hit a new peak at $4,697.71 an ounce.
Silver prices surged more than 4% to a fresh all-time high of $94.03 an ounce, supported by safe-haven demand as well as its role as an industrial metal.
Oil prices edge lower
Oil prices edged lower, giving back part of last week’s gains as markets weighed the growing risk of a trade dispute linked to Greenland. Brent crude slipped 0.1% to $59.74 a barrel, while U.S. West Texas Intermediate fell 0.1% to $55.95.
Crude had rallied early last week on concerns that unrest in Iran could threaten oil supplies from the Middle East, a region that accounts for a significant share of global output. Much of that risk premium faded after President Trump ruled out immediate U.S. military action, leading prices to pull back before stabilizing toward the end of the week.
China’s economy meets 2025 growth target
China’s economy grew slightly more than expected in the fourth quarter of 2025, data released on Monday showed, as policy stimulus and a pickup in consumption helped the country meet its annual growth target.
Gross domestic product rose 4.5% year on year in the October–December period, in line with forecasts but down from 4.8% in the previous quarter, marking the slowest pace in three years. On a quarter-on-quarter basis, GDP expanded 1.2%, marginally above expectations of 1.1%.
The result brought full-year 2025 growth to 5%, meeting Beijing’s target. The government is widely expected to set a similar 5% growth goal again, as it continues to face heightened U.S. trade tensions, weak consumer demand and a prolonged property sector downturn.
European stocks dropped sharply on Monday after U.S. President Donald Trump threatened to impose economic sanctions on several countries in the region if they resist his plans to acquire Greenland.
By 03:05 ET (08:05 GMT), Germany’s DAX was down 1.3%, France’s CAC 40 fell 1.6% and Britain’s FTSE 100 slipped 0.4%.
Tariff threats dampen market sentiment
President Donald Trump said over the weekend that he plans to impose tariffs on exports to the United States from eight European countries that have opposed his proposal for the U.S. to acquire Greenland. The countries affected include France, Germany and the United Kingdom, along with several Nordic and northern European nations.
Trump said an initial 10% tariff would be introduced on Feb. 1, rising to 25% in June if no agreement is reached allowing the United States to take control of Greenland, the semi-autonomous territory of Denmark.
The European Union has already suspended ratification of a U.S.–EU trade agreement, and media reports indicate the bloc may revive a €93 billion tariff package targeting U.S. goods. Such a move could sharply escalate tensions and increase the risk of a wider transatlantic trade conflict.
According to IG market analyst Tony Sycamore, the latest dispute has intensified fears of NATO fragmentation and the breakdown of last year’s trade accords with European partners, pushing investors toward risk-off positioning in equities while boosting demand for safe havens such as gold and silver.
This has put the World Economic Forum, which gets under way later in the session in Davos, squarely in focus as global leaders convene, including a large U.S. delegation led by President Trump.
Euro zone inflation data due
Monday’s key economic event is the release of December eurozone inflation data, particularly with U.S. markets closed for the Martin Luther King Jr. holiday. Annual eurozone CPI is expected to come in at 2.0% in December, matching the European Central Bank’s target for the first time since mid-2025, down from 2.1% in November.
The ECB has left interest rates unchanged since ending its rate-cut cycle in June and signalled last month that it is under no immediate pressure to adjust policy, as inflation concerns have eased and growth surprised on the upside toward the end of 2025. The ECB’s next policy meeting is scheduled for early February.
Earlier data showed China’s economic growth slowed to a three-year low in the fourth quarter, with GDP expanding 4.5% year on year, compared with 4.8% in the previous quarter.
U.S. tech giants in focus
The European corporate earnings calendar is thin, though UK building products group Marshalls reported full-year 2025 adjusted profit before tax in line with market expectations despite ongoing uncertainty in its end markets.
U.S. technology heavyweights listed in Europe will also be in focus, as they could become targets of retaliatory measures by European authorities if President Trump follows through on tariff threats against European countries until the U.S. is permitted to acquire Greenland.
Crude slips lower
Oil prices edged lower on Monday, giving back part of the previous week’s gains as markets weighed the growing risk of a trade dispute linked to Greenland. Brent crude slipped 0.1% to $59.74 a barrel, while U.S. West Texas Intermediate fell 0.1% to $55.95.
Prices had climbed early last week on concerns that unrest in Iran could threaten oil supplies from the Middle East, a region that represents a large share of global production. However, much of that risk premium faded after President Trump said there would be no immediate U.S. military action, triggering a pullback before prices stabilized later in the week.
Bayer AG shares rose more than 7% on Monday after the U.S. Supreme Court agreed to hear the German group’s appeal in a pivotal Roundup weedkiller case, fueling optimism that a favorable decision could reduce the company’s long-standing legal burden.
The U.S. Supreme Court said on Friday it will consider whether federal pesticide regulations override state-level failure-to-warn lawsuits when the Environmental Protection Agency has not mandated cancer warnings for glyphosate-based products.
The case, known as Durnell, stems from an October 2023 Missouri jury ruling that found Monsanto—acquired by Bayer in 2018—did not adequately warn consumers about alleged cancer risks linked to Roundup, awarding $1.25 million in damages. Other allegations were dismissed, and the jury declined to impose punitive damages. A Missouri appeals court upheld the verdict in 2025.
Bayer argues that permitting such claims weakens the EPA’s authority, noting the agency has repeatedly determined that glyphosate is unlikely to cause cancer in humans and has approved Roundup labeling without cancer warnings. The U.S. Solicitor General has supported Bayer’s stance, warning that the Missouri decision could allow juries to overrule federal scientific judgments.
Investors viewed the Supreme Court’s move as a possible inflection point in litigation that has burdened Bayer’s valuation since its $63 billion purchase of Monsanto.
Passive income is a form of income that is generated repeatedly and relatively steadily after an initial investment of time, effort, or capital to build a system, asset, or operating model. Unlike active income, which requires a direct exchange of time for money, passive income leverages capital, technology, intellectual property, or branding to create long-term value. While it does not mean “earning money without doing anything,” passive income reduces dependence on daily labor and provides a more sustainable and resilient financial foundation over time.
The Benefits of Passive Income
Financial stability and diversification
Passive income creates a more secure financial position by ensuring that earnings continue even when active work is reduced or interrupted. This stability helps individuals and businesses better manage expenses and plan for the future.
Relying on multiple income streams lowers overall financial risk. If one source underperforms or stops, others can continue to provide cash flow, reducing vulnerability to economic or industry-specific shocks.
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Because passive income is not directly tied to hours worked, it allows individuals to reclaim time. This time can be invested in personal growth, strategic thinking, or higher-value activities.
Many passive income streams grow over time through reinvestment and compounding. Assets such as investments, digital products, or intellectual property can generate increasing returns without proportional effort.
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Passive income models can expand without significantly increasing workload. Once systems are in place, income can grow through broader distribution, automation, or market expansion.
With steady passive income, individuals have more freedom to change careers, start new ventures, or pursue opportunities that may not offer immediate active income.
Financial resilience and leverage of assets
It allows people to maximize the value of existing assets—such as capital, expertise, content, or technology—by turning them into ongoing income-generating resources.
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Having reliable income streams beyond active work lowers financial pressure, leading to greater peace of mind and improved decision-making.
By reducing the need for constant operational involvement, passive income enables a shift toward long-term strategy, innovation, and sustainable growth.
How to Create Passive Income
Before participating in trading or investing in economic or financial markets, acquiring knowledge is essential for preparing for sustainable long-term growth, helping investors develop discipline, risk management skills, and a clear strategic mindset to navigate market volatility.
How Can We Generate Passive Income?
What is Stocks and Bonds?
Stocks and bonds are two common types of investments. Stocks represent ownership in a company, meaning you benefit when the company grows through rising share prices and sometimes dividends, but you also face higher risk because prices can fluctuate. Bonds, on the other hand, are loans you give to a government or company; in return, you receive regular interest payments and get your original money back at maturity, making them generally more stable but with lower returns than stocks.
What is high-risk investments?
High-risk investments are investments where the chance of losing money is significant, but they offer the potential for very high returns. Their value can change rapidly due to market volatility, economic events, or speculation, and outcomes are less predictable than traditional investments. Examples include cryptocurrencies, early-stage startups, speculative stocks, leveraged trading, and some derivatives. These investments are usually suitable only for investors who can tolerate large fluctuations and afford to lose part or all of their invested capital.
EUR/USD edges higher toward the 1.1625 area in early European trading on Monday, as the euro finds support from signs that Europe is prepared to respond to U.S. tariff measures.
The move follows President Donald Trump’s announcement of a 10% tariff on goods from several European countries, prompting pushback from European leaders.
Meanwhile, expectations that the Federal Reserve will keep interest rates unchanged at its January meeting—amid a resilient labor market and still-elevated inflation—have weighed on the U.S. dollar, providing additional support for the pair.
The EUR/USD pair advances to around 1.1625 in early European trading on Monday, snapping a four-day losing streak. The U.S. dollar comes under modest pressure against the euro after President Donald Trump threatened to escalate tariffs on eight European nations opposing his proposal for the United States to acquire Greenland.
U.S. markets are closed on Monday in observance of Martin Luther King Jr. Day.
Over the weekend, Trump announced a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, set to take effect on February 1. He added that the levy would rise to 25% in June unless an agreement is reached allowing the U.S. to purchase Greenland.
Europe is set to respond after President Donald Trump imposed additional tariffs on key allies, with European leaders expected to convene an emergency meeting in the coming days to consider potential retaliation. Renewed concerns over a trade war and the longer-term implications of Trump’s latest move have weighed on the U.S. dollar, providing support for the EUR/USD pair.
“While one could argue the tariffs are a threat to Europe, it is actually the dollar that is absorbing most of the impact, as markets appear to be pricing in a higher political risk premium for the U.S. currency,” said Khoon Goh, head of Asia research at ANZ.
That said, stronger-than-expected U.S. labor market data released last week have delayed expectations for further Federal Reserve rate cuts until June, which could help cap downside pressure on the dollar. According to the CME FedWatch tool, markets are pricing in nearly a 95% probability that the Federal Open Market Committee will leave rates unchanged at its January 27–28, 2026 meeting.
PCE inflation data, the start of the fourth-quarter earnings season, a Supreme Court ruling on tariffs, and the Davos World Economic Forum will all be in focus during the holiday-shortened week ahead.
GE Aerospace appears well positioned for an earnings-driven rally, while United Airlines may face downside pressure amid weaker results and persistent sector headwinds.
U.S. equities slipped on Friday, ending the week with modest declines across the Dow Jones Industrial Average, S&P 500, and Nasdaq, as investors digested President Donald Trump’s latest remarks on the Federal Reserve and broader geopolitical developments.
For the week, the Dow Jones Industrial Average slipped 0.3%, the S&P 500 eased 0.4%, and the Nasdaq Composite declined 0.7%, while the small-cap Russell 2000 gained 2% to notch another record close on Friday.
Volatility may pick up in the week ahead as investors evaluate prospects for economic growth, inflation, interest rates, and corporate earnings against a backdrop of persistent trade and geopolitical tensions.
Over the weekend, President Donald Trump said eight NATO member countries could face tariffs of up to 25% unless an agreement is reached allowing the United States to purchase Greenland.
U.S. financial markets will be closed on Monday in observance of the Martin Luther King Jr. Day holiday. On the economic front, Thursday’s core PCE price index— the Federal Reserve’s preferred inflation measure—will be the key data release to watch.
The fourth-quarter earnings season also ramps up, with results due from several high-profile companies, including Netflix (NASDAQ:NFLX), Intel (NASDAQ:INTC), United Airlines (NASDAQ:UAL), Procter & Gamble (NYSE:PG), Johnson & Johnson (NYSE:JNJ), GE Aerospace (NYSE:GE), and 3M Company (NYSE:MMM).
Investors are additionally awaiting a U.S. Supreme Court ruling on the legality of President Donald Trump’s global tariffs, after the court declined to issue a decision last week. The justices are also set to hear arguments related to Trump’s effort to remove Federal Reserve Governor Lisa Cook.
Attention will also turn to Davos, Switzerland, where Trump is scheduled to attend the World Economic Forum, potentially generating fresh headlines.
Against this backdrop, regardless of broader market direction, I outline below one stock that appears positioned for upside demand and another that could face renewed downside pressure. These views are strictly short-term, covering the week ahead from Monday, January 19 through Friday, January 23.
Top Pick: GE Aerospace Poised for Gains
GE Aerospace is set to report earnings this week, with expectations calling for another strong quarter. Analysts are forecasting solid results, supported by robust aerospace demand and a new wave of engine orders, including Delta’s recent selection of GE’s GEnx engines for its expanding Boeing 787 fleet.
The company is scheduled to release its fourth-quarter update before the market opens on Thursday at 6:30 a.m. ET. Options markets are bracing for heightened volatility, with implied pricing suggesting a post-earnings move of approximately ±5.2% in GE shares.
Analysts are forecasting another strong quarter, with consensus estimates pointing to adjusted earnings of $1.44 per share, up from $1.32 a year earlier, alongside revenue growth of roughly 13% year over year to about $11.2 billion. Performance is being underpinned by structural tailwinds, including sustained demand for LEAP and GEnx engines—both of which are sold out for the remainder of the decade—as well as rising engine deliveries.
Investor focus is expected to center as much on GE’s forward guidance as on its headline results. Recent announcements around new orders and capacity expansions have bolstered confidence in the outlook for 2026, with analysts projecting full-year earnings of approximately $7.01 per share.
As a global leader in jet engines and aerospace systems, GE Aerospace continues to benefit from a recovery in commercial air travel and strong growth in its high-margin aftermarket services business.
GE remains in a strong upward trend, with its share price up 78.8% over the past year and trading just 2.3% below its 52-week high. Momentum indicators continue to point higher, with technical signals flashing a “strong buy” across multiple timeframes.
If GE delivers the anticipated double-digit revenue growth, maintains or expands margins, and provides upbeat commentary on future demand, the stock could extend its rally as investors further re-rate GE Aerospace as a high-quality, cash-generative industrial leader.
Trade Setup:
Entry: $326 (pre-earnings)
Targets: $340 → $350 (gain ~5%-7%)
Stop: $315 (risk ~3%)
Stock to Sell This Week: United Airlines
By contrast, United Airlines is confronting increasing headwinds ahead of its fourth-quarter earnings release, scheduled for Tuesday at 4:00 p.m. ET. While the carrier has demonstrated resilience in recent quarters, consensus expectations suggest growing challenges that could result in an earnings miss or a muted market response.
Options-implied volatility signals a potential post-earnings move of roughly ±5.9% in UAL shares, underscoring the elevated risk around the report.
Wall Street expects the Chicago-based carrier to post earnings of $2.96 per share, down 9.2% from $3.26 a year earlier. Revenue is forecast to come in around $15.4 billion, though rising operating costs, capacity-related pressures, and lingering issues such as service disruptions and softer international performance continue to cloud the outlook.
The broader airline industry remains challenged by ongoing operational strains, including flight delays, cancellations, and capacity constraints.
Adding to the uncertainty, renewed tariff pressures on European routes could further complicate United’s international operations. Heightened trade tensions and the risk of retaliatory measures may weigh on the airline’s sizable transatlantic network.
Recent technical signals reinforce the downside risk, with UAL’s one-hour indicators flashing a “strong sell” as both momentum and moving averages remain firmly tilted lower.
Against this backdrop, the stock appears vulnerable in the week ahead. Even if headline results come in near expectations, a cautious outlook or incremental pressure on key international routes could be sufficient to push shares lower.
Economic growth depends on population expansion and the formation of new households. While the idea of fewer people—less congestion, smaller crowds, and reduced strain on infrastructure—may seem appealing, the risks associated with population decline are often understated. Much like deflation, a shrinking population poses serious and potentially greater threats to long-term economic stability.
Demographers use the “total fertility rate” (TFR), defined as the average number of births per woman, as a key measure of population sustainability. A TFR of at least 2.1 is required to maintain a stable population, with the additional 0.1 accounting largely for infant mortality. Although the global TFR stood at 2.24 last year, this figure masks significant regional disparities. Excluding Africa, the global fertility rate falls well below 2.0.
In 2025, most major advanced economies reported TFRs under the replacement threshold of 2.0, underscoring the growing demographic challenge facing industrialized nations.
No major developed economy currently records a total fertility rate above the 2.1 replacement threshold. Outside of Africa, global population growth is already in decline. Historically, from 1950 to 1970, the world’s wealthiest nations averaged more than 2.7 births per woman. Since 1995, however, that figure has fallen sharply to around 1.6, reaching a record low of approximately 1.5 during the 2020–2025 period.
Globally, population growth remains marginally positive, driven largely by demographic expansion in Africa and rising life expectancy among older populations. However, Asia’s two largest economies—China and Japan—are experiencing population decline, a trend that constrains their long-term growth potential. More critically, shrinking cohorts of younger workers are increasingly unable to shoulder the financial burden of supporting aging populations that are living longer and often facing higher healthcare needs.
China has formally abandoned its long-standing one-child policy, but behavioral patterns shaped by decades of enforcement have proven difficult to reverse. Today, many young couples are reluctant to have even a single child, prioritizing career advancement and higher incomes instead. Compounding the challenge, the legacy of the policy produced severe demographic distortions. Prior to 2010, widespread prenatal sex selection—driven by the desire to raise a single male “heir” to support parents in old age—led to a significant gender imbalance, with roughly 118 male births for every 100 female births between 2002 and 2008. The result is a surplus of men and a shrinking pool of potential spouses.
In the mid-1990s, a typical Chinese household consisted of four grandparents, two parents, and one heavily relied-upon child—the so-called “young emperor.” This inverted demographic pyramid is financially unsustainable, as the burden of supporting multiple generations increasingly falls on a single income earner.
Europe faces an even steeper demographic challenge. With an average fertility rate of just 1.4 children per woman and a comparatively generous system of old-age pensions, the region confronts mounting fiscal pressure. These constraints help explain Europe’s historical reliance on the United States for security spending—a strategy that may prove risky as President Donald Trump presses European nations to assume greater responsibility for their own defense.
The United States remains in a stronger demographic position than Europe or much of Asia, in part because of its relatively effective assimilation of immigrants and higher rates of family formation in more conservative regions of the country. However, with the administration introducing tighter immigration restrictions and stepping up efforts to detain and deport undocumented workers, questions are emerging over whether there will be a sufficient supply of willing young workers to staff the growing number of factories being brought back onshore.
Another structural risk embedded in these demographic trends is the growing strain on Social Security and Medicare. These programs function as intergenerational compacts, in which today’s workers finance the retirement and rising healthcare costs of the elderly. Unlike 401(k) plans or IRAs, they are not savings vehicles but largely unfunded entitlements built on historical assumptions of higher birth rates and a broad, growing workforce.
As younger generations are increasingly less likely to marry, have children, or pursue stable, high-earning careers—instead relying more on gig-based employment—the system faces mounting pressure. These shifts raise serious concerns about the long-term sustainability of funding future benefits, particularly in a society producing fewer contributors to support the next generation of retirees.
The Australian dollar advanced after the TD-MI Inflation Gauge rose to 3.5% year-on-year in December.
China’s GDP grew 1.2% quarter-on-quarter in the fourth quarter of 2025, accelerating from the previous quarter and exceeding market expectations.
Meanwhile, the U.S. dollar struggled as risk aversion intensified amid escalating uncertainty surrounding U.S.–Greenland developments.
The Australian dollar strengthened against the U.S. dollar on Monday after Australia’s TD-MI Inflation Gauge rose to 3.5% year-on-year in December, up from 3.2% previously.On a monthly basis, inflation jumped 1.0% in December 2025, marking the fastest pace since December 2023 and a sharp acceleration from the 0.3% increases seen in the prior two months.
AUD/USD also found support from China’s key economic data, with developments in the Chinese economy closely watched given Australia’s strong trade links with China.
Data from China’s National Bureau of Statistics showed industrial production grew 5.2% year-on-year in December, accelerating from 4.8% in November, supported by resilient export-led manufacturing activity.
China’s GDP expanded 1.2% quarter-on-quarter in the fourth quarter of 2025, up from 1.1% in Q3 and above the market consensus of 1.0%. On an annual basis, GDP rose 4.5% in Q4, easing from 4.8% in the previous quarter but beating expectations of 4.4%.
Meanwhile, retail sales rose 0.9% year-on-year in December, falling short of forecasts for a 1.2% increase and November’s 1.3% reading.In contrast, industrial output exceeded expectations, rising 5.2% YoY versus estimates of 5.0% and improving from 4.8% a month earlier.
U.S. Dollar softens amid escalating uncertainty over the U.S.–Greenland dispute
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, is under pressure and hovering near 99.20 at the time of writing. US financial markets remain closed on Monday in observance of Martin Luther King Jr. Day, resulting in thinner liquidity.
The Dollar has come under renewed pressure amid rising risk aversion, fueled by growing uncertainty surrounding the US–Greenland dispute. Over the weekend, US President Donald Trump reiterated plans to impose tariffs on eight European nations that have opposed his proposal for the United States to acquire Greenland.
According to Bloomberg, Trump said the US would levy a 10% tariff starting February 1 on imports from EU members Denmark, Sweden, France, Germany, the Netherlands, and Finland, as well as Britain and Norway. The tariffs would remain in place until Washington is allowed to proceed with the Greenland acquisition.
Meanwhile, recent US labor market data have pushed expectations for additional Federal Reserve rate cuts further into the year. Fed officials have indicated limited urgency to ease policy until there is clearer evidence that inflation is sustainably returning to the 2% target.
Reflecting this shift, Morgan Stanley revised its 2026 outlook, now projecting two rate cuts in June and September, compared with its prior forecast that anticipated cuts in January and April.
Data from the US Department of Labor showed that Initial Jobless Claims unexpectedly declined to 198K for the week ending January 10, well below market expectations of 215K and down from the prior week’s revised 207K. The figures suggest layoffs remain subdued and the labor market continues to show resilience despite prolonged tight financial conditions.
Inflation data offered mixed signals. Core CPI, excluding food and energy, rose 0.2% month-over-month in December, below expectations, while annual core inflation held steady at 2.6%, matching a four-year low. Headline CPI increased 0.3% MoM, in line with forecasts, leaving annual inflation unchanged at 2.7%. The data reinforced signs of easing price pressures after earlier readings were distorted by shutdown-related effects.
In Australia, Reserve Bank of Australia (RBA) policymakers acknowledged that inflation has eased substantially from its 2022 peak, though recent data point to renewed upside risks. Headline CPI slowed to 3.4% YoY in November, the lowest level since August, but remains above the RBA’s 2–3% target range. Trimmed mean CPI edged down to 3.2% from 3.3% in October.
The RBA noted that inflation risks have modestly shifted to the upside, while downside risks—particularly from global developments—have diminished. Policymakers currently expect only one additional rate cut this year, with underlying inflation projected to stay above 3% in the near term before easing toward 2.6% by 2027. Reflecting these expectations, ASX 30-Day Interbank Cash Rate Futures for February 2026 were trading at 96.35 as of January 16, implying a 22% probability of a rate hike to 3.85% at the next RBA policy meeting.
The Australian Dollar approaches the 0.6700 level, facing resistance near the nine-day EMA
The AUD/USD pair trades near 0.6680 on Monday, with daily chart signals showing consolidation around the nine-day Exponential Moving Average (EMA), pointing to a near-term neutral outlook. The 14-day Relative Strength Index (RSI) stands at 52.78, remaining above the neutral level and indicating underlying upside momentum.
A sustained move below the short-term moving average could bring the 50-day EMA at 0.6642 into focus as initial support. Deeper declines may extend toward 0.6414, the lowest level recorded since June 2025.
Conversely, a decisive break above the nine-day EMA at 0.6690 would strengthen the bullish case, potentially opening the way for a move toward 0.6766, the highest level since October 2024.
EUR/JPY moved higher as the euro drew support from EU efforts to push back against potential U.S. tariffs on European allies.
President Donald Trump said tariffs would be imposed on eight European countries that have opposed his proposal involving Greenland.
Meanwhile, Japan’s industrial production dropped 2.7% month-on-month in November, marking its sharpest fall since January 2024.
EUR/JPY rebounded after three consecutive sessions of losses, trading near 183.60 during Asian hours on Monday. The cross found support as the euro was buoyed by reports that European Union ambassadors agreed on Sunday to intensify efforts to deter U.S. President Donald Trump from imposing tariffs on European allies, while also preparing retaliatory measures if the duties go ahead, according to diplomats.
On Saturday, Trump said he would impose tariffs on eight European countries opposing his proposal for the United States to acquire Greenland. He said a 10% levy would be applied from Feb. 1 on goods from Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as Britain and Norway, until Washington is allowed to purchase Greenland, Bloomberg reported.
FILE – This July 31, 2012 file photo shows the euro sculpture in front of the headquarters of the European Central Bank, ECB, in Frankfurt, Germany. The eurozone economy has finally recouped all the ground lost in the recessions of the past eight years after official figures Friday April 29, 2016. showed that the 19-country single currency bloc expanded by a quarterly rate of 0.6 percent in the first three months of the year. (AP Photo/Michael Probst, File) ORG XMIT: LON101
Japan’s industrial production fell 2.7% month-on-month in November 2025, slightly worse than the preliminary estimate of a 2.6% decline, reversing October’s 1.5% rise and marking the steepest contraction since January 2024.
Gains in EUR/JPY could be limited as the yen finds support from expectations of Bank of Japan rate hikes and the prospect of increased fiscal spending under Prime Minister Sanae Takaichi.The BoJ is widely expected to keep its policy rate unchanged at 0.75% this week, although markets are watching for a potential move as early as June.
Last week, BoJ Governor Kazuo Ueda reiterated that the central bank stands ready to tighten policy if economic and inflation trends develop in line with its projections.
Meanwhile, Finance Minister Satsuki Katayama signaled the possibility of coordinated intervention with the United States, stressing on Friday that all options—including direct market action—remain on the table to address the yen’s recent weakness.
Gold prices jumped to record highs in Asian trade on Monday, nearing $4,700 an ounce, as strong safe-haven demand followed President Donald Trump’s threat to impose fresh tariffs on eight European countries over Greenland.
Spot gold was last up 1.8% at $4,675.55 an ounce by 19:31 ET (00:31 GMT), after touching a session record of $4,690.75 earlier.U.S. gold futures rose 1.9% to $4,681.10 an ounce.
The precious metal built on last week’s strong gains, during which bullion posted a series of record highs, supported by growing expectations of U.S. interest rate cuts and elevated geopolitical risks.
Silver surged more than 4% to a fresh record high of $94.03 an ounce, buoyed by both safe-haven demand and its role as an industrial metal.
U.S. President Donald Trump said on Sunday he would impose fresh tariffs on eight European countries that have opposed Washington’s plan to acquire Greenland.Trump said a 10% levy would be introduced from Feb. 1, with the rate set to rise to 25% in June if no agreement is reached.
The affected countries include France, Germany and the United Kingdom, along with several Nordic and northern European nations.The move drew sharp criticism from European officials and reignited fears of a wider transatlantic trade dispute, driving investors toward precious metals.
The tariff threat added to an already favorable environment for gold, which has been supported in recent weeks by expectations that the Federal Reserve will begin cutting interest rates later this year.
Weaker U.S. economic data and signs of easing inflation have reinforced the case for monetary easing, lowering the opportunity cost of holding non-yielding assets such as gold.
Geopolitical risks have also underpinned prices, with gold rising sharply last week amid renewed concerns over developments in the Middle East, including tensions involving Iran.
Most Asian equities declined on Monday after U.S. President Donald Trump reignited global trade concerns by slapping tariffs on several major European countries over Greenland.
Chinese stocks limited their losses after fourth-quarter GDP data came in above expectations, with the economy also meeting Beijing’s 2025 annual growth target of 5%.
South Korean shares outperformed regional peers, driven by gains in chipmakers after U.S. memory giant Micron Technology said it would acquire a fabrication plant from Taiwan’s Powerchip Semiconductor Manufacturing for $1.8 billion.
Other regional markets largely followed the slide in Wall Street futures after Trump’s tariff threat, with S&P 500 futures dropping as much as 1% during Asian trading. U.S. markets are closed on Monday for a public holiday.
Asian stocks slip after Trump’s Greenland tariff move
Japan’s Nikkei 225 and TOPIX fell 1% and 0.5%, respectively, while Hong Kong’s Hang Seng index declined 0.8%.
Australia’s ASX 200 slipped 0.4%, Singapore’s Straits Times index lost 0.5%, and futures for India’s Nifty 50 dropped 0.4%.
Over the weekend, Trump threatened to impose trade tariffs of up to 25% on several European countries, saying the measures would stay in place until an agreement was reached for the United States to acquire Greenland.
European nations largely rejected Trump’s demands for the Danish territory, with France also reportedly preparing retaliatory economic steps against Washington.
Trump’s tariff threats compounded already elevated geopolitical tensions worldwide, keeping investors cautious toward risk-sensitive assets. Gold prices surged to a record high on Monday amid strong safe-haven demand.
Trump has repeatedly pressed for control of Greenland, arguing the territory is vital to U.S. national security. He has also floated the possibility of military action, a threat that appeared more credible following a U.S. incursion in Venezuela earlier this year.
China stocks steady as 2025 GDP hits official target
China’s CSI 300 and Shanghai Composite indexes traded within a narrow range on Monday after official data showed quarter-on-quarter GDP growth slightly exceeded expectations in the December period.
GDP expanded 4.5% year-on-year in the fourth quarter, matching forecasts and bringing full-year 2025 growth to 5%, in line with Beijing’s target.
The outcome was largely supported by resilient exports, as demand outside the United States remained strong, helping keep the manufacturing sector buoyant.
Consumer activity was also aided by ongoing stimulus measures, as policymakers worked to reverse a prolonged post-COVID confidence slump.
However, December data still pointed to uneven recovery, with fixed-asset investment contracting far more than expected and retail sales growth falling short of forecasts.
South Korean shares jump on chipmaker rally after Micron deal
South Korea’s KOSPI outperformed regional peers on Monday, climbing more than 1% on the back of gains in semiconductor stocks.SK Hynix and Samsung Electronics, the country’s two largest chipmakers, rose 0.2% and 1.9%, respectively.
Sentiment toward the memory-chip makers was boosted after rival Micron Technology announced a $1.8 billion investment to acquire a facility from Taiwan’s Powerchip Semiconductor Manufacturing.
Powerchip shares jumped 10% in Taipei trading following the announcement.Elsewhere in Asia, chip stocks retreated on Monday but remained supported by gains from last week after strong earnings from industry bellwether TSMC.
Most Asian currencies were little changed on Monday as fresh U.S. tariff threats against Europe dampened risk appetite, while markets also absorbed China’s slightly better-than-expected growth figures.
The U.S. Dollar Index slipped 0.2% from a seven-week peak during Asian trading, while Dollar Index futures were down 0.3% as of 03:58 GMT.
Yuan rises to a 32-month peak following China’s Q4 GDP release
China helped temper the broader risk-off sentiment after data showed the world’s second-largest economy expanded slightly faster than expected in the fourth quarter.
The GDP reading enabled China to achieve its official 5% growth target for 2025, providing some comfort on regional economic momentum despite ongoing worries about subdued domestic demand and stress in the property sector.The onshore yuan pair USD/CNY slipped 0.1% to its weakest level since May 2023.
Asia FX little changed as Trump renews Greenland tariff threats
Risk appetite weakened after U.S. President Donald Trump said he would impose tariffs on eight European countries that have opposed his proposal to acquire Greenland.
Trump said the duties would start at 10% from Feb. 1 and increase to 25% in June if no deal is reached, reigniting concerns about escalating transatlantic trade tensions and possible spillover effects on global markets.
Media reports indicated the European Union is considering suspending progress on an EU-U.S. trade agreement and may revive a previously proposed 93 billion euro tariff package on U.S. goods.
France has called on the bloc to consider deploying its anti-coercion instrument against the United States, a tool designed to respond to economic pressure from external partners.
Asian currencies mostly moved sideways, with traders remaining cautious and refraining from bold bets.
USD/KRW ticked up 0.1%, while USD/SGD slipped 0.2%.USD/INR was little changed.AUD/USD added 0.1%.
Japanese snap elections come into focus
The Japanese yen strengthened against the dollar, with USD/JPY slipping 0.2% to a 10-day low, supported by safe-haven demand amid global trade uncertainty.Domestic political developments also remained in focus after reports said Prime Minister Sanae Takaichi is weighing a snap election in the coming weeks to bolster her mandate.
“For now, the yen continues to face headwinds from election-related uncertainty, and greater clarity is unlikely before February,” MUFG analysts said in a note.
“Over the medium term, our global team still sees the yen as having been relatively weak, and we maintain a bias for USD/JPY to trend lower, subject to election outcomes,” they added.
Canada and China reached a preliminary trade agreement on Friday to sharply reduce tariffs on electric vehicles and canola, pledging to dismantle trade barriers and deepen strategic cooperation during Prime Minister Mark Carney’s visit.
On his first trip to China since 2017 by a Canadian prime minister, Carney aims to repair relations with Canada’s second-largest trading partner after the United States, following months of diplomatic outreach.
Canada will initially permit imports of up to 49,000 Chinese electric vehicles at a 6.1% most-favoured-nation tariff, Prime Minister Mark Carney said following talks with Chinese leaders, including President Xi Jinping.
The move marks a sharp reversal from the 100% tariff imposed on Chinese EVs in 2024 under former Prime Minister Justin Trudeau, in line with similar measures taken by the United States. China shipped 41,678 electric vehicles to Canada in 2023.
“This restores access to levels seen before the recent trade disputes, but within a framework that offers significantly more benefits for Canadians,” Carney said, adding that the import quota would be expanded gradually to around 70,000 vehicles over the next five years.
“To build a globally competitive electric vehicle industry, Canada must learn from innovative partners, gain access to their supply chains, and stimulate domestic demand,” Carney said, distancing himself from former prime minister Justin Trudeau’s view that tariffs were necessary to shield local manufacturers from subsidised Chinese competitors.
Canada’s decision to ease EV tariffs runs counter to U.S. policy, drawing criticism from some members of President Donald Trump’s cabinet ahead of a planned review of the U.S.–Canada–Mexico trade agreement. However, Trump himself voiced support for Carney’s approach.
“That’s exactly what he should be doing. Signing trade deals is good for him. If you can strike a deal with China, you should take it,” Trump said at the White House.
AGRI-FOOD PARTNERSHIP: Ontario Premier Doug Ford denounces the deal.
“The federal government is effectively opening the door to a surge of low-cost Chinese-made electric vehicles without firm assurances of comparable or timely investment in Canada’s economy, auto industry, or supply chains,” Ford said in a post on X.
China imposed retaliatory tariffs in March on more than $2.6 billion worth of Canadian agricultural and food exports — including canola oil and meal — in response to tariffs introduced by Trudeau. Additional duties on canola seed followed in August.
As a result, China’s imports of Canadian goods fell by 10.4% in 2025.
Under the new agreement, Canada expects China to cut tariffs on canola seed to a combined rate of around 15% by March 1, down from 84%, Carney said. He added that discriminatory tariffs on Canadian canola meal, lobsters, crabs and peas are also expected to be lifted from March 1 through at least the end of the year.
Canadian canola futures climbed.
The agreements are expected to generate nearly $3 billion in export orders for Canadian farmers, fishers and food processors, Carney said.
China’s Ministry of Commerce said it would adjust anti-dumping duties on canola and lift anti-discrimination measures on certain Canadian agricultural and seafood products, citing Canada’s decision to lower tariffs on electric vehicles.
Carney added that President Xi Jinping had agreed in principle to grant visa-free travel for Canadians visiting China, though further details were not provided.
In a statement released by state-run Xinhua, the two countries said they would resume high-level economic and financial talks, expand trade and investment, and deepen cooperation in sectors including agriculture, oil, gas and green energy.
Carney said Canada plans to double the size of its power grid over the next 15 years, creating potential opportunities for Chinese investment, including in offshore wind projects. He also said Canada is ramping up liquefied natural gas exports to Asia, with annual production set to reach 50 million tonnes by 2030, all of which will be shipped to Asian markets.
Carney says China has become “more predictable”
Given the growing complications in Canada’s trade relationship with the United States, it is unsurprising that Carney’s government is seeking to strengthen trade and investment ties with Beijing, which offers a vast market for Canadian agricultural exports, said Even Rogers Pay of Beijing-based consultancy Trivium China.
U.S. President Donald Trump has imposed tariffs on certain Canadian goods and has even suggested that the longtime U.S. ally could become America’s 51st state. China, which has also been targeted by Trump’s tariffs, is eager to deepen cooperation with a G7 country traditionally seen as part of the U.S. sphere of influence.
Asked whether China had become a more predictable and reliable partner than the United States, Carney said recent engagement with Beijing had delivered greater clarity and tangible outcomes. “Looking at how our relationship with China has evolved in recent months, it has become more predictable, and we are seeing results from that,” he said.
Carney added that he had also discussed Greenland with President Xi Jinping, saying the two leaders found their views broadly aligned. Trump has recently revived his claim to the semi-autonomous Danish territory, prompting NATO members to push back against U.S. criticism that Greenland is insufficiently defended.
Analysts said the warming of ties between Canada and China could alter the political and economic backdrop of Sino-U.S. competition, though Ottawa is unlikely to shift decisively away from Washington.
“Canada remains a core U.S. ally and is deeply integrated into American security and intelligence systems,” said Sun Chenghao, a fellow at Tsinghua University’s Centre for International Security and Strategy. “A strategic realignment away from Washington is therefore highly unlikely.”
The recent rally in Japanese equities, sparked by Prime Minister Sanae Takaichi’s announcement of a snap election, could lose momentum if she ultimately achieves her political objectives, as increased fiscal spending risks stoking inflation and pushing up government borrowing costs.
Japan’s Topix index jumped over 4% this week, marking its strongest advance since July, as investors revived the so-called “Takaichi trade,” betting on heavier government expenditure. Takaichi is seeking to strengthen her grip on power by expanding her party’s seat count, which would give her greater latitude to pursue expansionary economic policies.
Market participants believe Takaichi could follow in the footsteps of her mentor, former Prime Minister Shinzo Abe, whose stimulus-driven Abenomics era propelled asset prices. She has identified sectors such as artificial intelligence, semiconductors, defense, space, and content industries as key targets for investment.
Although Japanese equities are once again following a familiar pattern of rallying ahead of Lower House elections, sustained upside may hinge on the specifics of Takaichi’s fiscal agenda. Meanwhile, bond investors are demanding higher yields to compensate for holding Japanese government debt, even as global bond yields ease.
“Rising break-even inflation rates suggest the market is pricing in looser, more inflationary policies after the election, with inflation staying above the Bank of Japan’s target for longer,” said Aninda Mitra, head of Asia macro and investment strategy at BNY Investments.
Economists anticipate that Japan’s consumer inflation will ease to below 2.0% this year — falling under the Bank of Japan’s target for the first time in five years — helped in part by reductions in gasoline taxes and other regulated prices.
However, the yen’s decline to a more than one-year low of 159.45 per dollar on Wednesday, and to its weakest level since 1992 on a trade-weighted basis, has reignited inflation worries. The currency’s weakness is also eroding its traditional support for exporter stocks. Pressure on the yen has intensified as Takaichi’s dovish stance on monetary policy is seen as constraining the BOJ’s ability to raise interest rates swiftly.
“The yen is the biggest risk factor for Takaichi,” said Chisa Kobayashi, Japan equity strategist at UBS SuMi TRUST Wealth Management. “Further depreciation could push inflation higher, dampen consumer spending, and eventually weaken voter backing.”
Neil Newman, head of strategy at Astris Advisory Japan, said a Takaichi election victory could drive another 5% rise in the Nikkei 225 Stock Average. “With the government planning targeted investments in strategic sectors, a surge in capital expenditure is likely,” he said.
Despite Takaichi’s strong approval ratings, which have led many investors to expect a comfortable win, some analysts are growing more cautious after Komeito — previously a junior coalition partner of the Liberal Democratic Party — shifted toward cooperation with the main opposition party.
As a result, the election outcome has become increasingly uncertain, said Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan.
“The one thing that’s clear is that both camps will be compelled to campaign on bold spending promises to attract voters,” he said.
Volatility across major CoinDesk indices stayed low, with bitcoin maintaining its position above the key $94,500 breakout level despite limited price movement. Dash (DASH) led the market, climbing 15% on the day and pushing its weekly gain to 141% as most other altcoins cooled. Meanwhile, altcoins showed relative strength against major cryptocurrencies, with the CoinDesk 80 Index ticking higher as traders waited for new catalysts from U.S. markets and global political developments.
Crypto market volatility slowed sharply on Friday, with all major CoinDesk indexes moving less than 1% since midnight UTC. The subdued action comes as Bitcoin continues to trade above the key $94,500 level, which it broke earlier this week after months of range-bound movement.
Zcash, APT, and Polygon (POL) each recorded slight losses, while Dash—a privacy-focused payments token—continued its strong start to the year, climbing 15% and extending its weekly gain to 141%. The market is now looking for its next catalyst as political unrest in Iran and Venezuela revives crypto’s “safe-haven” narrative, highlighted by the divergence between digital assets and U.S. equities, which underperformed BTC and ETH this week.
Derivatives market positioning
Exchanges have unwound nearly $240 million in leveraged crypto futures positions. Total futures open interest across the market has eased to $143 billion from $146 billion, signaling a cooling in demand for leveraged trading.
Bitcoin’s volatility slump persists. Volmex’s 30-day implied volatility now reflects an average daily move of about 2.5% over the next month. Ethereum’s 30-day implied volatility has also fallen, reaching its lowest level since early 2024.
ZEC saw futures open interest drop 14% in 24 hours, contributing to capital outflows across most major tokens, including bitcoin, ether, solana, and XRP. In contrast, Monero stood out with an 8% increase in open interest.
ZEC’s annualized funding rates plunged to -50%, indicating strong demand for bearish, short positions. This also suggests that downside bets may be becoming crowded, a setup that can often precede a potential short squeeze.
In the options market, block trades showed a large short position in bitcoin’s $112,000 call expiring on February 6. This may have been paired with a long spot position as part of a covered call strategy to generate additional yield. For Ethereum, block flows leaned toward the iron condor strategy, which is typically used to benefit from a range-bound price environment.
Crypto token overview
DASH once again took the lead on Friday, climbing over 15% since midnight UTC, even as most of the altcoin market stayed subdued following an earlier rally at the start of the week. This could be a constructive signal for the broader altcoin space, as DASH had also been the first mover during Asian trading on Tuesday, hours before the wider market broke higher.
XTZ also displayed strength, advancing 8.3% from a morning low of $0.57 to $0.62. The CoinDesk 80 Index (CD80), which tracks a broader range of altcoins, is up 0.68% since midnight, while the CoinDesk 20 (CD20) is largely flat—suggesting relative outperformance among altcoins as major tokens move sideways.
Traders are now watching the U.S. market open to see whether traditional markets might inject volatility ahead of the weekend, a period that is typically marked by lighter volume and liquidity.
European leaders are treating Trump’s comments about Greenland as a serious issue, though his ultimate objective remains unclear. They may respond by offering incentives, such as expanding the U.S. military and business footprint on the island. According to Standard Chartered economists Christopher Graham and Philippe Dauba-Pantanacce, a coordinated European approach focused on territorial sovereignty and the role of NATO will be crucial.
Greenland dispute set to strain NATO unity
President Trump has stated that he wants the United States to take control of Greenland on national security grounds, indicating that both economic and military tools could be employed. Any use of force would represent a fundamental challenge to NATO, as Greenland is an autonomous territory of Denmark, a member of both NATO and the EU. However, European leaders may interpret Trump’s remarks differently: some may view them literally, while others may regard them as leverage to expand the U.S. military footprint, secure access to rare-earth resources, or pressure European allies to assume a greater share of defense responsibilities.
Europe is likely to respond through a mix of diplomatic incentives and deterrence. Possible inducements include expanding the U.S. military and commercial footprint in Greenland, potentially granting Washington a right of first refusal over third-party activity there. Europe may also push for a stronger NATO role in Greenland and across the Arctic to address U.S. security concerns and weaken the case for any takeover—while also making any hypothetical U.S. military move more complex. A unified European position will be essential, particularly in clearly communicating to the United States the military and economic consequences of any erosion of NATO.
Trump has effectively set off a regime change in Venezuela. The Monroe Doctrine has suddenly become relevant again. A special forces mission in Caracas plays across social media, Nicolás Maduro is taken into U.S. custody to face trial, and Washington declares it will run the country temporarily. No lives are lost. Global attention immediately focuses on Venezuela’s massive oil reserves, drawing in major energy companies.
Overnight, ETFs respond predictably. Defense-related funds soar, while oil services ETFs rally on expectations of rebuilding, drilling, and upgrading energy infrastructure.
Initially, that seems reassuring for ETF providers. Thematic and sector-based strategies still appear to “work.” Despite elevated fees, retail investors’ chronically bad timing, and the tendency for funds to debut right at the top of market themes, money still pours in when major geopolitical shocks occur.
But here’s the difficult reality. By 2026, issuers who depend on thematic ETFs will face a much tougher landscape. Not because their products stop being relevant, but because a newer, more direct alternative is quietly overtaking them: Prediction markets.
I say this frankly as someone inside the ETF business who is seeing investor habits evolve in real time, particularly among those under 30. Across social platforms, younger millennials and Gen Z investors are bypassing thematic ETFs entirely and placing their macro bets through prediction markets instead.
Understanding Prediction Markets
A prediction market is a marketplace where people buy and sell contracts based on the outcome of a clearly defined event. These contracts usually pay out either $1 if the event happens or $0 if it doesn’t. Their prices move beforehand as expectations change.
Polymarket and Kalshi are currently two of the biggest platforms. Although their legal frameworks and back-end systems vary, they function in much the same way. Users can trade contracts on issues such as whether a government decision will be made, if interest rates will be reduced by a set deadline, or whether a geopolitical conflict will intensify. When the result is known, the contracts settle automatically.
Most of these platforms operate with or alongside crypto, enabling fast account setup, funding, and settlement. More significantly, they remove extra layers of indirection. Instead of buying securities that represent a theme, users wager directly on the outcome of the event itself.
Why Prediction Markets Could Undermine Thematic ETFs
Prediction markets react much more aggressively to fresh information. When a development raises the likelihood of a given outcome, contract prices can jump by double digits within moments. That speed and sensitivity is a major draw for investors.
In the Venezuela scenario, markets tied to potential U.S. intervention rallied far more dramatically than any defense or energy-themed ETF—even those offering multiple layers of leverage. ETFs spread exposure across many companies, balance sheets, and indirect impacts. Prediction markets offer pure exposure to a single event.
Thematic ETF investing, by contrast, requires multiple steps of inference. You begin with a headline. You estimate which sectors might benefit. You choose the companies with the most relevant exposure. You locate an ETF with a reasonable basket, verify fees and trading volume, and then hope the broader market validates your thesis.
Prediction markets compress that whole decision chain into a single action. You find the contract and place your bet. The outcome may be all-or-nothing, and the pricing is constantly arbitraged, but the simplicity is the appeal. They make sense instantly. Gen Z especially gravitates toward speed, transparency, and the freedom to get in and out of a position without digging through fund disclosures, holdings breakdowns, or factor metrics.
The Outlook for Thematic ETF Strategies
This isn’t a death notice for the category. I don’t believe sector ETFs are disappearing. Low-cost, market-cap sector funds—especially those priced below 10 basis points and spanning the 11 GICS sectors—will continue to serve as essential asset-allocation building blocks.
Major thematic ETFs should also endure. Products with over $1 billion in assets have the size, trading depth, and embedded capital gains that tend to keep investors from exiting. Momentum still works in their favor.
Where the real pressure shows up is at the edges. Smaller thematic products—particularly those with less than $50 million, along with brand-new funds launched to chase the latest storyline—are entering a very tough competitive landscape. Their rivals are no longer just other ETFs. They’re up against prediction markets that provide quicker, simpler, and more emotionally direct ways to express a macro belief.
If you’re running an ETF business, now might be the moment to tap the brakes. The old playbook—rolling out a stream of hyper-niche thematic funds and hoping a few gain traction—looks much less sustainable in 2026. With retail investors tiring out, fees getting squeezed, and prediction markets gaining momentum, the “launch everything and see what works” model is hitting some real limits.
The Federal Reserve’s Beige Book released Wednesday indicated that “tariff-driven cost pressures were widespread across every district.” Out of the 12 Fed districts, only two saw mild price increases, while the remaining 10 experienced more intense price pressure. This suggests the Fed is unlikely to reduce benchmark interest rates at the upcoming FOMC meeting—unless signs of labor market weakness push them to cut rates again to support hiring.
Meanwhile, a 5.1% increase in existing home sales in December could point to a potential recovery in the housing sector. The median price of homes sold last month was $405,400, a gain of just 0.4% year-over-year, indicating that home price appreciation remains limited.
The Commerce Department reported that retail sales increased 0.6% in December, surpassing economists’ forecasts of a 0.5% gain. In addition, October’s retail sales were revised to a 0.1% decline, instead of the previously estimated 0.2% rise. Overall, 10 of the 13 retail categories posted higher sales in November, making this a strong performance that should continue to support solid GDP expansion.
Meanwhile, three missile-capable ships and an aircraft carrier are being deployed to the Middle East in a show of force aimed at pressuring Iran’s government. Crude oil markets are pricing in the possibility that Iran’s oil exports could be removed from global supply, depriving the regime of revenue. This signals that President Trump may take further action beyond sanctions and a 25% tariff on nations that trade with Iran.
Intense diplomatic efforts have been taking place between Iran and neighboring Arab countries. On Wednesday, President Trump said Iran had halted the killing of anti-government demonstrators and would not carry out death sentences against people accused of seeking to overthrow the regime. His comments suggested the U.S. might be stepping back from launching military strikes. Trump told reporters that the U.S. had received word Iran had “no plans to execute protesters.”He went on to say that new information indicated the deaths had ceased and the executions had been stopped, adding that many believed executions were scheduled for that day.
U.S. stock index futures were little changed Thursday evening as strength in tech shares and a strong report from TSMC helped Wall Street break a two-session slide.
Gains were further supported by upbeat results from Morgan Stanley and Goldman Sachs, though worries over escalating geopolitical risks in Iran limited the broader market advance.
S&P 500 futures edged up 0.1% to 6,988.50 by 18:35 ET (23:35 GMT). Nasdaq 100 futures also gained 0.1% to 25,727.0, while Dow Jones futures ticked up to 49,670.0.
Tech, chipmakers rise after TSMC’s bumper Q4
Chipmakers led Wall Street higher on Thursday after TSMC (NYSE:TSM) reported record fourth-quarter earnings and pointed to continued strong demand driven by artificial intelligence. As the world’s largest contract chip producer and a key industry barometer, TSMC surged 4.4% in U.S. trading.
Customer NVIDIA Corporation (NASDAQ:NVDA) advanced 2.2% after its report, while competitor AMD (NASDAQ:AMD) gained 1.9%. TSMC CEO C.C. Wei noted that both the firm’s clients and their own customers are still eager to secure more semiconductors amid a major buildout of AI infrastructure.
Wei also projected a steep increase in capital investment in 2026 as the company scales production to meet accelerating demand. Chip strength extended modestly into the wider tech sector, which had seen some profit-taking earlier in the week after sharp early January gains.
Wall St breaks 2-day losing streak, bank stocks gain
Wall Street’s major indexes ended a two-day slide on Thursday, helped by gains in tech stocks and upbeat earnings from several banks. Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS) jumped 4.6% and 5.8% after reporting strong December quarter results—boosting sentiment despite softer bank earnings earlier in the week.
The results effectively kicked off the fourth-quarter earnings season, with a wave of heavyweight names set to follow. Netflix Inc (NASDAQ:NFLX), 3M Company (NYSE:MMM), and U.S. Bancorp (NYSE:USB) will release earnings on Tuesday, while Johnson & Johnson (NYSE:JNJ) is due Wednesday.
Later in the week, Visa Inc (NYSE:V), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), and Intuitive Surgical Inc (NASDAQ:ISRG) are among many firms scheduled to report. By the close, the S&P 500 rose nearly 0.3%, the NASDAQ Composite added 0.25%, and the Dow Jones Industrial Average outperformed with a 0.6% gain fueled by bank strength.
The three major indexes had dropped for two consecutive sessions earlier this week amid market anxiety over escalating geopolitical tensions involving Iran.
Most Asian currencies traded in narrow ranges on Friday, while the U.S. dollar held firm near a six-week high, supported by upbeat U.S. economic data and growing expectations that Federal Reserve rate cuts are not imminent.
The US Dollar Index tarded largely flat during Asian hours after rising to its highest since early December overnight
US Dollar Index Futures also traded flat as of 03:35 GMT.
Strong U.S. data delays expectations of Fed rate cuts
U.S. initial jobless claims unexpectedly declined to 198,000 last week, beating forecasts of 215,000 and underscoring ongoing resilience in the labor market.
The figures strengthened expectations that the Federal Reserve will leave interest rates unchanged for a longer period, with traders now projecting the first rate reduction around the middle of the year. Remarks from multiple Fed officials overnight further contributed to the cautious sentiment.
Policymakers indicated they may delay rate cuts at the upcoming meeting, pointing out that employment conditions remain firm while inflation pressures have yet to fully ease.
Yen holds firm on government backing; won heads for weekly loss
In Japan, the yen inched higher after hovering near 18-month lows, with USD/JPY slipping 0.3%. The currency gained some backing following verbal interventions from government officials aimed at curbing its rapid decline.
“Recent headlines suggest the Bank of Japan is growing uneasy about the yen’s weakness, and BOJ policymakers now view the exchange rate as having a bigger impact on inflation,” MUFG analysts noted.
The yen has faced persistent pressure amid rising speculation that Prime Minister Sanae Takaichi may call an early snap election as soon as next month. Markets view the prospect of a vote as negative for the currency, on expectations of looser fiscal policy and increased government spending.
Across Asia, the South Korean won saw USD/KRW climb 0.2%, putting it on track for a gain of more than 1% this week, despite Thursday’s pullback. Brief support came earlier in the week after remarks from U.S. Treasury Secretary Scott Bessent helped bolster sentiment toward the currency.
In China, the onshore yuan (USD/CNY) was steady, while the offshore rate (USD/CNH) inched 0.1% higher. The Indian rupee (USD/INR) and the Singapore dollar (USD/SGD) were little changed, while Australia’s AUD/USD pair added 0.1% on Friday.
Jerome Powell’s eight-year leadership at the Federal Reserve is ending amid significant challenges for the U.S. central bank and divided opinions among policymakers about the right approach to monetary policy. So, what might Powell’s last moves as Chair look like in this environment?
The labor market is still slightly weaker than full employment. Private sector job growth has stalled recently, and although the unemployment rate dropped a bit in December, it remains above what most economists consider the long-term natural rate.
On the inflation front, recent data are more promising. Core CPI inflation fell to 2.6% year-over-year in December from 3.1% in August. Some temporary shutdown effects may be lowering this figure by about 0.1 percentage points, and the Fed’s preferred inflation gauge, the PCE deflator, likely hasn’t improved as much. However, the overall trend for core inflation entering 2026 is clearly downward.
Given this, the Federal Open Market Committee (FOMC) likely has room to continue guiding the federal funds rate toward a neutral level in the near term. The forecast remains two quarter-point rate cuts in March and June, with the rate then holding steady at 3.00%-3.25%.
However, the opportunity for further rate reductions is narrowing. Fiscal stimulus from the recent One Big Beautiful Bill Act is expected to start boosting the economy by spring or summer. Additionally, tariff risks seem to be declining, which could also spur faster growth later in the year. The recent 75 basis points of rate cuts over the past three months will likely provide some support as well.
If labor market and inflation indicators show signs of overheating in the coming months, Powell and the FOMC might opt to pause policy adjustments and leave things steady for the next Chair. This successor could face skepticism from a committee under pressure from the Trump administration. The expectation of stronger economic growth in spring and summer further supports holding rates steady.
For now, the current forecast stands, but there is growing risk that rate cuts may be delayed or reduced compared to the baseline prediction.
Oil prices are rising sharply, as WTI nears $62 and Brent crude moves up toward $66 per barrel. These increases highlight the market’s responsiveness to geopolitical tensions, despite no actual disruptions in supply. The question remains: where will prices go from here?
Main Highlights of WTI Crude Oil
WTI Crude Oil prices are sharply rising amid concerns that ongoing protests in Iran might escalate and impact production or disrupt the Strait of Hormuz.
However, this upward pressure is balanced by underlying fundamentals and a global surplus.
The current price around $62 is a crucial threshold: surpassing this resistance level could pave the way for a rally toward the six-month highs near $66.
In today’s trading environment, it can be difficult for market participants to isolate the key drivers of price action on a day‑to‑day basis. Beyond enduring themes like economic growth trajectories, inflation trends, the expansion of AI infrastructure, and sovereign debt pressures, fresh geopolitical tensions seem to emerge almost daily.
Amid simmering issues in places like Venezuela — and speculation about other potential flashpoints — Iran has become the dominant focus for energy markets. Nationwide protests there, sparked by severe economic strains and a collapsing currency, have raised serious questions about stability in one of the world’s most influential oil‑producing countries.
Although these demonstrations have not yet led to direct disruptions in oil output, the unrest has prompted traders to price in a growing geopolitical risk premium. Concerns about possible escalation — including the risk of broader conflict or disruption to key infrastructure such as the Strait of Hormuz, through which a large share of global seaborne oil exports transit — are contributing to recent volatility in crude prices.
As a reminder, Iran remains a key influence on global energy markets due to both its oil production capacity and its control over the Strait of Hormuz — a vital maritime chokepoint through which nearly 20 million barrels per day of crude and petroleum products transit, representing a large share of seaborne global oil flows. Any actual or perceived threat to exports or shipping through this route can have outsized impacts on pricing and risk sentiment.
Against this backdrop, oil prices have recently climbed, with Brent trading in the mid‑$60s and WTI previously approaching the $62 per barrel area, as traders price in geopolitical risk tied to the unrest in Iran. This reflects markets’ sensitivity to potential escalations, even though there have been no confirmed widespread production outages to date.
However, this upside is balanced by broader market fundamentals. Global oil inventories remain substantial, and additional output from other producers — including resumed Venezuelan exports and lingering oversupply concerns — continues to temper the rally. This backdrop helps explain why prices have fluctuated and, at times, pulled back when geopolitical anxieties ease.
Looking ahead, the future direction of crude prices is likely to hinge on developments in Iran’s domestic unrest and whether tensions translate into actual disruptions in oil production or interference with key export infrastructure such as the Strait of Hormuz. So far, most of the price appreciation has been driven by risk premium and sentiment rather than physical losses of barrels.
If broader instability were to disrupt supply routes or exports, markets could respond with a more pronounced and sustained price surge, particularly given the strategic importance of Middle East exports to the global oil system. However, short‑term moves are also currently influenced by macro factors such as inventory data and demand signals, as well as comments from policymakers that can quickly recalibrate risk perceptions.
Technical Analysis of Crude Oil: Daily Chart for WTI
Looking at the technicals, WTI Crude Oil is on a five-day winning streak, climbing from the lower end of its three-month trading range between $55 and $62 up to the upper boundary. Chart-wise, the current price level is a crucial threshold: a break above the $62 resistance — which also aligns with the 200-day moving average — could open the door for further gains toward the six-month highs around $66, where it would face resistance from the longer-term bearish trend line drawn from the second half of 2023’s peak.
Conversely, if indications emerge that the protests are easing and stability is being restored in Iran, the geopolitical risk premium currently weighing on crude prices may diminish. This could trigger a reversal, causing prices to retreat below the $60 mark. Regardless of the outcome, oil traders should closely monitor developments in Iran in the days ahead.
The U.K. economy showed signs of recovery in November following a weak start to the fourth quarter, though economic outlooks remain uncertain.
Data published Thursday by the Office for National Statistics revealed that the U.K.’s gross domestic product increased by 0.3% in November, rebounding from a 0.1% monthly decline in October. Year-over-year, the U.K. economy grew by 1.4% in November, up from 1.1% growth the month before.
The manufacturing sector saw strong growth of 2.1% in November, supported by the ongoing reopening of Jaguar Land Rover’s factories as the company continues to recover from last year’s cyberattack.
However, Michael Brown, senior research strategist at Pepperstone, cautioned that this modest growth rate does little to inspire confidence in the U.K.’s economic outlook. He pointed out that risks remain heavily skewed to the downside, and that recent government policy reversals have eroded up to two-thirds of the fiscal flexibility that Chancellor Rachel Reeves had secured in the November Budget.
Late last year, Finance Minister Reeves increased taxes to help reduce the deficit and support higher welfare spending, but the tax hikes were less severe than initially expected.
Reeves recently announced a £4.3 billion fund aimed at easing the impact of upcoming interest rate hikes on the hospitality sector, especially as Covid-era support ends in April and property valuations are updated.
In December, the Bank of England cut interest rates at its final policy meeting of 2025, with expectations of further cuts this year due to forecasts of a significant slowdown in inflation. Alan Taylor, an external member of the Bank’s monetary policy committee, noted this earlier in the week.
He added that falling energy prices and measures introduced in the autumn budget to reduce living costs should help bring inflation back to the 2% target by mid-2026.
“Interest rates are likely to keep declining, provided my economic outlook aligns with the data, as it has over the past year,” Taylor said. British inflation eased to 3.2% in November 2025, falling more than anticipated but still above the Bank of England’s 2% goal.
TSMC (NYSE: TSM) reported a better-than-anticipated net profit for the fourth quarter on Thursday, as the global leader in contract chip manufacturing continued to capitalize on strong demand for its advanced chips driven by artificial intelligence.
The company also announced a significantly increased capital expenditure outlook for 2026, aiming to rapidly expand production capacity to keep up with growing AI-related demand.
TSMC’s CFO, Wendell Huang, revealed in a post-earnings call that the company expects its capital expenditure for 2026 to range between $52 billion and $56 billion, a substantial increase from $40.9 billion in 2025.
Huang also cautioned that TSMC’s mid- to long-term profit margins are likely to decline as the company continues expanding its production capacity, particularly in overseas locations. CEO C.C. Wei echoed these concerns, highlighting “significantly higher” capital spending and costs in the years ahead.
For the quarter ending December 31, TSMC posted a record net profit of T$505.74 billion ($16 billion), surpassing Bloomberg’s estimate of T$467 billion and significantly up from T$374.68 billion the previous year.
The company’s quarterly revenue, previously disclosed, rose to T$1.046 trillion ($33 billion), up from T$868.46 billion a year earlier. Huang forecasted first-quarter 2026 revenue between $34.6 billion and $35.8 billion.
TSMC’s strong performance was driven by robust demand for its advanced chips, with its 3-nanometer products contributing over 25% of revenue from its wafer segment.
CEO C.C. Wei indicated that the strong AI-driven demand is expected to continue in the coming years, with positive feedback from TSMC’s largest customers. He emphasized that the “AI megatrend” remains firmly in place.
While TSMC’s high-performance computing segment continues to be its primary revenue source, the smartphone chip division’s contribution increased slightly to 32% in Q4, up from 30% the previous quarter. This growth was likely boosted by Apple Inc., which incorporated new TSMC-made chips in its iPhone 17 lineup.
TSMC is also a crucial supplier of advanced AI processors to NVIDIA Corporation, a partnership that has significantly boosted its earnings and market value over the past two years.
The company has benefited greatly from a surge among major tech firms to expand data center infrastructure supporting AI development, as advanced processors are vital for handling AI models’ intense computing demands.
Last year, TSMC announced a $165 billion investment in the U.S., mainly targeting increased production capacity at its Arizona facility. This move also appears aimed at addressing the Trump administration’s push for more domestic manufacturing.
On Thursday, TSMC signaled plans to further expand U.S. production, with a goal of allocating 20% to 30% of its overall capacity to the Arizona plant.
TSMC is broadly seen as a key indicator of chip demand and the AI market trends.
Gold prices declined during Asian trading on Thursday following three days of record-breaking highs, as U.S. President Donald Trump softened his position on the unrest in Iran and Federal Reserve Chair Jerome Powell eased concerns, reducing the demand for gold as a safe haven.
Spot gold was last down 0.8% at $4,588.55 per ounce by 23:04 ET (04:04 GMT), while U.S. Gold Futures fell 0.3% to $34,594.10. In the previous session, gold reached a record peak of $4,642.72 per ounce.
Other precious metals experienced even sharper drops, with silver plunging nearly 6% to $87.74 per ounce and platinum prices falling 4% to $2,309.52 per ounce.
Gold retreats from highs as Trump adopts a milder approach toward Iran
The precious metal had climbed to consecutive record highs amid concerns that escalating unrest in Iran might provoke U.S. military intervention and destabilize the Middle East, along with worries about political pressure on the U.S. Federal Reserve.
Those fears subsided after President Trump indicated a softer approach toward Iran. He stated that he was reassured Iranian authorities would cease killing protesters and expressed his belief that there were no plans for large-scale executions at this time.
His remarks lowered the chances of an immediate U.S. military response to the protests against the government of Supreme Leader Ayatollah Ali Khamenei, easing the geopolitical tensions that had driven gold’s recent surge.
Trump states there is no intention to dismiss Fed Chair Powell.
Gold prices also came under pressure after Trump attempted to ease worries about the Federal Reserve. In an interview with Reuters, he stated that he had no plans to remove Federal Reserve Chair Jerome Powell, despite ongoing investigations, which helped to alleviate investor concerns about the independence of U.S. monetary policy.
The recent decline in gold was partly due to profit-taking following its rapid rise, which pushed prices well beyond key technical levels.
Despite Thursday’s drop, gold remained supported by expectations of U.S. interest rate cuts later this year, ongoing geopolitical tensions, and robust central bank purchases.
Lower interest rates generally benefit gold by decreasing the opportunity cost of holding a non-yielding asset.
ECB policymaker Martins Kazaks warned that the European Central Bank must remain vigilant as the U.S. administration’s criticism of the Federal Reserve introduces new risks to the global economic outlook. He was speaking after Fed Chair Jerome Powell was reportedly threatened with criminal charges over remarks about the renovation of the central bank’s headquarters, a move that has raised concerns about the independence of the world’s most influential monetary authority.
Kazaks, who heads Latvia’s central bank and is a contender for the ECB’s vice presidency, said such attacks resembled the politics of emerging economies and added to growing uncertainties facing the ECB, alongside the potential for an AI-driven financial bubble and China’s assertive trade practices. He stressed that risks to both inflation and growth exist on both sides, leaving no room for complacency, and warned that weakening the Fed’s independence could ultimately hurt lower-income Americans through higher inflation and interest rates. On China, he criticized subsidies, rare-earth export limits, and exchange-rate policies that restrain the yuan’s rise, suggesting they may conflict with WTO rules, and called on Europe to respond through long-overdue reforms and, if necessary, targeted industrial policy.
Kazaks said ECB interest rates remain appropriate, noting that euro zone inflation is showing positive signs, with even core inflation measures—excluding volatile items—moving closer to the ECB’s 2% target.
Today may bring another chance for the Supreme Court to issue a ruling on tariffs—we’ll know around 10:00 a.m. whether an opinion is released. The timing is notable for equities, as the S&P 500 is tightly consolidating and approaching a point where it must break in one direction. I still believe the setup looks more like a market top than the beginning of a melt-up. Technically, it could even be interpreted as a terminal diagonal triangle.
Ultimately, the key factor is volatility, which remains extremely subdued. While Tuesday did bring a notable rise in the left-tail index to 10.7—still a relatively low level—it was higher than before. In any case, we’ll find out today which way things break.
For now, interest rates seem stuck in place, with neither strong nor weak economic data moving the long end of the curve. Even the CPI report—despite undershooting on core inflation—failed to budge the 30-year yield. The setup still resembles a bull flag, but at the moment, there’s little follow-through.
If you’re looking for rising yields, Japan is where to focus. The 10-year JGB continues its steady ascent and is now around 2.17%. Based on the wedge pattern and a forward projection, the yield could push toward 2.25%.
On Tuesday, USD/JPY broke out, climbing past the 159 resistance level. Currently, the market seems to be focusing more on Japan’s fiscal spending plans than on interest rate differentials. A move up to 162 is looking more and more probable.
Software stocks took a severe hit. Shares of Salesforce (NYSE:CRM), ServiceNow (NYSE:NOW), and Workday (NASDAQ:WDAY) were heavily battered. Notably, ServiceNow has fallen back to its 2021 highs, which also align with the lows seen in April 2025.
Workday’s performance is actually even more troubling.
Salesforce seems to be holding up better than the others, but that’s not exactly reassuring. It looks like the market fears these companies might get disrupted or cannibalized by AI. Honestly, the charts across the board look pretty bleak.
Yesterday, the US CPI came in weaker than anticipated, supporting our prediction of a Fed rate cut in March. However, we expect the market to take a few more weeks before fully embracing this outlook. The US dollar could recover more than its recent losses, possibly driven by a hawkish stance following the Powell criminal investigation. In the meantime, we’ll continue to watch the Japanese yen closely today, along with developments in the Greenland discussions.
USD: We Maintain a Short-Term Optimistic Outlook
US inflation came in softer than consensus and well below our expected 0.4% month-on-month core reading. Yet, yesterday’s market reaction actually reinforced our short-term positive outlook on the dollar: despite the weak CPI data, Fed rate expectations barely shifted, and the dollar quickly regained strength.
This may partly be due to market caution in over-interpreting the CPI figures amid ongoing shutdown-related distortions. It also indicates that concerns about the Fed’s independence are diminishing, helped by expectations that the criminal probe into Chair Powell may not advance much further and opposition from some GOP lawmakers. We believe there’s a fair chance the dollar will ultimately come out stronger from this situation, as Powell might adopt a more firmly hawkish stance to assert Fed independence.
Additionally, the key message from yesterday’s CPI report is the continued softness in goods prices, highlighting how limited the tariff effects on inflation have been. Several tariff-sensitive categories remained weak, including appliances (-4.3% MoM), furniture (-0.4%), new vehicles (0.0%), and video and audio equipment (-0.4%). This clear trend suggests US retailers are still squeezing their margins. Overall, this strengthens our confidence in a Fed rate cut in March, although it may take time for markets to fully accept this outlook.
Today, focus shifts to November’s PPI, with core PPI expected to rise by 0.2% month-on-month, and retail sales, which are anticipated to remain fairly strong. A busy lineup of Fed speakers—including Paulson, Miran, Kashkari, Bostic, and Williams—will be closely watched for any subtle hawkish signals in support of Powell and the Fed’s independence.
Additionally, the Supreme Court is expected to issue a ruling on tariffs today, likely unfavorable. If that happens, significant noise from the Trump administration is expected, though markets are unlikely to be caught off guard. Our baseline expectation is for a mildly positive reaction in the dollar.
EUR: Greenland Discussions Likely to Have Limited Market Impact
A US delegation, including JD Vance and Marco Rubio, is scheduled to meet today with officials from Denmark and Greenland. So far, US threats related to Greenland have had minimal impact on markets—limited mostly to some movements in EUR/DKK forwards—meaning there’s little risk premium to be unwound even if the talks lead to a cooperative outcome. Nevertheless, any progress could help eliminate a lingering geopolitical “black swan” risk for European currencies.
There seems to be potential for an agreement, likely based on the US abandoning any claims of “ownership” over Greenland—a stance firmly rejected by both Denmark and Greenland—in exchange for enhanced economic partnerships and a greater US military presence.
Positive headlines from the talks might ease the EUR/USD’s recent decline slightly, but we still expect the pair to approach 1.1600 in the near term.
JPY: Approaching the 160 Level for a Key Test
The USD/JPY rally shows no signs of slowing. Rising speculation about snap elections is bringing back a political risk premium, giving another push to test Japan’s currency tolerance band. Meanwhile, ongoing diplomatic tensions between Japan and China are adding more momentum to the move.
On Monday, we viewed 160 as a key upside target. While intervention concerns may slow the rally near that level, it increasingly looks like 160 will eventually be tested. Recall that in July 2024, Japan allowed the pair to surpass 160 and only intervened when it neared 162. Pinpointing the exact intervention level is tricky, but since the BoJ hasn’t acted sooner, it’s reasonable to expect they’ll wait until the pair exceeds 160.
For context, the first intervention on July 11, 2024, led to a 1.8% drop in USD/JPY. Interestingly, back then, CFTC net non-commercial positions on the yen were at -52% of open interest, whereas now they are 3% net-long, despite spot price action suggesting otherwise.
The crucial question is whether FX interventions alone can sustain a USD/JPY recovery. Historically, they haven’t. In 2024, interventions curtailed short-term gains but the subsequent USD/JPY decline was driven mainly by a sharp 50bp drop in US 2-year swap rates over the next month. That scenario seems unlikely now, and with snap election risks ongoing, markets remain hesitant to price in a BoJ rate hike before summer.
Michael Saylor’s Strategy Inc. purchased nearly $1.25 billion worth of Bitcoin, marking its largest acquisition of the cryptocurrency since July.
Between January 5 and 11, the former MicroStrategy acquired 13,627 BTC, according to a regulatory filing on Monday. Most of these recent purchases were funded by proceeds from at-the-market sales of its Class A common stock.
This move follows the company’s disclosure last week of a $17.44 billion unrealized loss in Q4, due to the decline in Bitcoin’s value. New accounting rules require the firm to report the fair value of its Bitcoin holdings in earnings, causing significant fluctuations between profits and losses. Bitcoin dropped 24% in the last quarter of 2025—the largest decline since Q2 2022.
The substantial loss comes at a critical juncture for the dot-com-era software company turned Bitcoin proxy, which now holds a cryptocurrency portfolio valued at about $62 billion. Investor confidence has waned in the treasury-company model pioneered by Strategy’s co-founder and chairman, Saylor, over five years ago. Despite outperforming benchmark stock indexes initially, the company’s shares fell 48% in 2025.
The decline in Strategy’s share price has raised concerns that the company might need to sell Bitcoin to cover future expenses like growing dividends and interest payments, given that the cryptocurrency generates no income and the software division produces minimal positive cash flow. To alleviate these worries, Strategy created a cash reserve by selling common shares on December 1, which amounted to $2.25 billion as of January 4.
As of 10:10 a.m. in New York on Monday, Strategy’s shares remained relatively steady at around $158. Bitcoin also showed little movement, trading near $90,700.
WASHINGTON — On January 12, former Federal Reserve chairpersons strongly condemned the ongoing U.S. criminal investigation into current Fed Chair Jerome Powell, describing it as an “unprecedented attempt” to undermine the central bank’s independence.
Two Republican senators also criticized the Trump administration and questioned the Justice Department’s credibility in pursuing charges against Powell, whom President Trump has long aimed to replace amid his push for lower interest rates.
On January 11, Powell disclosed that the Federal Reserve had received grand jury subpoenas and faced threats of a criminal indictment related to his Senate testimony from June.
The controversy centers on a $2.5 billion (S$3.2 billion) renovation project for the Federal Reserve’s headquarters. In 2025, President Donald Trump suggested he might dismiss Chair Jerome Powell due to cost overruns related to the historic building’s refurbishment.
On January 12, former Fed Chairs Ben Bernanke, Alan Greenspan, and Janet Yellen, along with other ex-economic leaders, publicly criticized the Department of Justice’s investigation.
In a joint statement, they condemned the probe as “an unprecedented attempt to use prosecutorial attacks” aimed at undermining the Fed’s independence.
The statement added, “This is typical of how monetary policy is conducted in emerging markets with fragile institutions, often resulting in severe inflation and broader economic dysfunction.”
“Such practices are unacceptable in the United States.”
In an unusual statement on January 11, Mr. Powell criticized the administration, calling the building renovation and his congressional testimony mere “pretexts.” “The possibility of criminal charges stems from the Federal Reserve’s commitment to set interest rates based on its best judgment of the public’s interest, rather than aligning with the president’s preferences,” Powell stated.
He pledged to perform his duties “without political fear or favor.”
Separately, New York Fed President John Williams noted that historically, political interference in monetary policy often results in “unfortunate” consequences such as inflation.
Stocks Reach New All-Time Highs
Despite concerns triggered by the investigation, U.S. stock indices closed at record highs.
Bernard Yaros, lead U.S. economist at Oxford Economics, noted, “The fact that market-based inflation expectations have stayed steady suggests that investors are largely dismissing the probe as having little or no effect on the Fed’s independence.”
The Federal Reserve operates independently with a dual mandate to maintain price stability and low unemployment. Its primary tool is adjusting the benchmark interest rate, which influences U.S. Treasury yields and borrowing costs.
President Trump has frequently criticized Powell, labeling him a “numbskull” and “moron” for the Fed’s policy choices and not cutting rates more aggressively.
On January 12, White House spokeswoman Karoline Leavitt told Fox News that Powell “has proven he’s not very good at his job.” Regarding whether Powell is a criminal, she added, “That’s a question the Department of Justice will have to answer.”
Republicans Push Back Against Investigation
The Justice Department’s investigation has faced backlash from across the political spectrum.
On January 11, Republican Senator Thom Tillis, a member of the Senate Banking Committee, pledged to block the confirmation of any Federal Reserve nominee—including the next Fed chair—until the legal issue is “fully resolved.”
He stated, “The independence and credibility of the Department of Justice are now at stake.”
Another Republican senator, Lisa Murkowski of Alaska, backed Thom Tillis’ stance, describing the investigation as “nothing more than an attempt at coercion.”
Earlier, Senate Majority Leader Chuck Schumer, a leading Democrat, criticized the probe as an assault on the Federal Reserve’s independence.
David Wessel, a senior fellow at the Brookings Institution, warned of serious risks if the Fed were to come under President Trump’s influence.
Politicians might be tempted to keep interest rates low to stimulate the economy before elections, while an independent Fed is expected to set policy focused on controlling inflation and maximizing employment.
Wessel told AFP that if Trump succeeds in swaying the Fed, the U.S. could face higher inflation and reduced willingness from global investors to finance the Treasury.
Powell was originally nominated as Fed chair by Trump during his first term. His chairmanship ends in May, but he may remain on the Fed board until 2028. In 2025, Trump also attempted to remove Fed Governor Lisa Cook over allegations of mortgage fraud.
On Wednesday, Bitcoin is trading above $95,000, having recently broken through a crucial resistance level. Ethereum continues its upward momentum, currently trading above $3,300 after gaining nearly 7% this week. Meanwhile, XRP has bounced back, holding support near its 50-day EMA at $2.17, indicating the potential for further gains.
On Wednesday, Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) continued trading higher, following gains of over 4%, 7%, and 5% respectively the previous day. BTC closed above a critical resistance level, while ETH and XRP held firm support at key price points. These top three cryptocurrencies by market cap appear poised to extend their rallies, with targets set at $100,000 for BTC, $3,500 for ETH, and $2.35 for XRP.
Bitcoin Breaks and Closes Above Key Resistance at $94,253
Bitcoin found support near the former upper consolidation zone around $90,000 on January 8 and showed a modest recovery through Monday. On Tuesday, BTC surged over 4%, closing above the 61.8% Fibonacci retracement level—measured from the April low of $74,508 to the October all-time high of $126,199—at $94,253. As of Wednesday, Bitcoin is trading near $95,300.
If Bitcoin maintains its upward momentum, it could push further toward the important psychological milestone of $100,000.
The daily chart’s Relative Strength Index (RSI) stands at 66, above the neutral midpoint of 50 and trending higher, signaling strengthening bullish momentum. Additionally, the Moving Average Convergence Divergence (MACD) indicator shows a sustained bullish crossover, with increasing green histogram bars above the neutral line, reinforcing the optimistic outlook.
BTC/USDT daily chart
Conversely, if Bitcoin undergoes a pullback, it may drop further toward the critical support level at $94,253.
Ethereum Bounces Back Following 50-Day EMA Test
Ethereum found support near its 50-day EMA at $3,139 last week and remained around that level through Monday. On Tuesday, ETH surged over 7%, closing above $3,325. As of Wednesday, it’s trading near $3,200.
If the upward momentum persists, Ethereum could push toward the December 10 high of $3,447. Similar to Bitcoin, Ethereum’s RSI and MACD indicators show bullish signals, reinforcing a positive outlook.
ETH/USDT daily chart
However, should Ethereum experience a pullback, it may drop further toward the 50-day EMA support at $3,139.
XRP bulls aiming for the $2.35 mark
XRP found support near its 50-day EMA at $2.07 last week and remained around that level through Monday. On Tuesday, XRP climbed over 5%. As of Wednesday, it is trading close to $2.16.
If the rally continues, XRP could push higher toward the daily resistance at $2.35. Similar to Bitcoin and Ethereum, XRP’s momentum indicators, including RSI and MACD, display bullish signals, reinforcing a positive outlook.
XRP/USDT daily chart
On the other hand, if XRP faces a pullback, it could extend the decline toward the 50-day EMA at $2.07.
China’s trade surplus widened in December, reaching CNY 808.80 billion, up from CNY 792.57 billion the previous month.
Exports grew 5.2% year-over-year in December, slightly lower than November’s 5.7% increase. Meanwhile, imports rose 4.4% year-over-year, accelerating from the 1.7% growth recorded in November.
In U.S. dollar terms, China’s trade surplus exceeded expectations, registering $114.10 billion compared to the forecasted $113.60 billion and $111.68 billion in the prior month. Exports increased 6.6% year-over-year, well above the 3.0% forecast and 5.9% last month. Imports also rose strongly by 5.7%, surpassing the anticipated 0.9% growth and previous 1.9% figure.
Market Reaction to China’s Trade Balance Data
AUD/USD continued its upward momentum, trading near 0.6692 shortly after the release of China’s trade data. The pair is currently up 0.16% on the day.
This section was released on Wednesday at 00:52 GMT as a preview ahead of China’s Trade Balance report.
China’s Trade Balance Overview
The General Administration of Customs is scheduled to release December trade data on Wednesday at 03:00 GMT. Analysts expect the trade surplus to widen to $113.60 billion, up from $111.68 billion previously. Exports are forecasted to grow 3.0% year-over-year in December, while imports are projected to rise 0.9% over the same period.
Given China’s significant influence on the global economy, this data release is anticipated to impact the Forex market.
In what ways can China’s Trade Balance impact the AUD/USD exchange rate?
AUD/USD is trading with modest gains ahead of China’s Trade Balance release. The pair dipped slightly as the U.S. dollar strengthened, supported by Consumer Price Index (CPI) inflation data that largely met economists’ expectations last month.
Should the trade data exceed forecasts, it may boost the Australian dollar, with initial resistance seen at the January 12 high of 0.6722. Further upside targets include the January 6 high at 0.6742 and the January 7 peak at 0.6766.
On the downside, the January 9 low of 0.6663 could provide support for buyers. A deeper decline might push the pair down to the December 4 low of 0.6614, followed by the 100-day exponential moving average near 0.6587.
WTI crude slipped to around $60.70 during Wednesday’s Asian trading session, pressured by significant increases in U.S. crude stockpiles. Meanwhile, President Trump assured Iranian protesters that support is forthcoming.
West Texas Intermediate (WTI), the U.S. crude oil benchmark, was trading near $60.70 during Wednesday’s Asian session, as prices edged lower amid rising supply pressures. WTI has been pressured by Venezuela restarting oil exports and the latest American Petroleum Institute (API) report showing a large build in U.S. crude inventories, while traders await the official Energy Information Administration (EIA) stockpile figures later in the day.
According to Reuters and industry sources, Venezuela has begun reversing recent production cuts made under its previous U.S. oil embargo, allowing crude exports to resume. Two supertankers carrying roughly 1.8 million barrels each departed Venezuelan waters, potentially marking the first shipments under a 50‑million‑barrel supply arrangement with Washington, following U.S. control of the country’s exports after political developments.
U.S. crude inventories saw a significant increase last week, with the American Petroleum Institute (API) reporting a build of 5.27 million barrels for the week ending January 9. This contrasts sharply with the previous week’s drawdown of 2.8 million barrels and defies market expectations, which had forecasted a 2 million barrel decline.
Despite the growing stockpiles, ongoing geopolitical tensions in Iran—a key oil producer—could provide support for WTI prices. U.S. President Donald Trump canceled all planned meetings with Iranian officials and pledged assistance to protesters amid reports of a severe crackdown by Iranian security forces, which has resulted in hundreds of deaths. Trump has repeatedly warned that the U.S. would intervene if the Iranian government continues to target demonstrators.
Silver prices hit a new all-time high approaching $90.00 amid escalating tensions as the U.S. threatens military action in Iran. Meanwhile, leaders of major global central banks have criticized Washington for undermining the Federal Reserve’s independence. Despite this, the U.S. dollar rebounded sharply after these central bank chiefs expressed strong support for Fed Chair Jerome Powell.
Silver (XAG/USD) continued its winning streak for a fourth consecutive trading day on Wednesday, rallying close to $90.00 during the Asian session. The white metal’s advance is supported by sustained demand for safe-haven assets amid ongoing geopolitical tensions.
In Iran, widespread civil unrest driven by soaring inflation, a sharp depreciation of the Rial against the US Dollar, and government corruption has led to the deaths of hundreds of protesters calling for political change.
In response, U.S. President Donald Trump has threatened military action against Tehran if the Iranian government continues to kill protesters.
Meanwhile, concerns over the Federal Reserve’s independence have intensified following criminal charges against Chairman Jerome Powell related to alleged mismanagement of funds for renovating Washington’s headquarters. Powell dismissed the charges as a “pretext,” attributing them to the Fed’s decision to set interest rates based on public interest rather than presidential preferences. These developments kept safe-haven assets in demand.
The news initially caused a sharp drop in the U.S. dollar, with experts warning that any threat to the Fed’s autonomy could negatively impact the country’s sovereign credit rating. However, the dollar quickly recovered after top officials from global central banks expressed strong support for Powell amid his dispute with President Trump.
“We stand in full solidarity with the Fed System and its Chair Jerome H. Powell,” said leaders of the European Central Bank, Bank of England, and nine other major institutions in a joint statement on Tuesday.
Silver technical analysis
XAG/USD is trading higher near $90.00 at the time of writing, with strong buying momentum pushing the price further into overbought territory.
The 14-day Relative Strength Index (RSI) has risen to 74.77 from 72.52, signaling increasing bullish momentum. Although the trend remains upward, the overextended conditions may limit further gains and lead to a period of consolidation.
A slight pullback in momentum, with the RSI retreating closer to the 70 level, could provide a healthy reset and support a more gradual upward move. However, if the RSI accelerates again toward the previous high near 85.90, the rally may face a sharper correction due to rising momentum fatigue.
Chinese semiconductor shares climbed on Wednesday after reports said Beijing will restrict purchases of Nvidia’s H200 AI chips to limited, special-use cases. The news largely outweighed an earlier announcement that the U.S. had cleared sales of the H200 to China.
Shares of Semiconductor Manufacturing International Corp, the country’s largest chipmaker by output, rose nearly 2% in Hong Kong, while Hua Hong Semiconductor gained almost 5%. On the mainland, Cambricon Technologies and Moore Threads Technology—both promoted as domestic alternatives to Nvidia—also advanced.
According to The Information, Chinese authorities have told local technology firms that H200 purchases will only be approved under exceptional circumstances, such as for university research and development facilities. This development muted the impact of the U.S. Commerce Department’s decision to allow H200 exports to China, a move previously hinted at by President Donald Trump in late December and accompanied by strict conditions.
Beijing is seen as taking a cautious approach to the approval as it continues to pursue full self-reliance across the artificial intelligence supply chain, with chip manufacturing playing a central role due to the heavy computing demands of AI development and deployment. Although China made progress in chip production in 2025, it is still widely regarded as far from achieving complete technological independence.
Chinese technology stocks have advanced over the past week, driven by a wave of high-profile IPOs from leading domestic AI companies that boosted confidence in the sector’s growth outlook. The rally extended on Wednesday, with MiniMax Group and Zhipu—listed as Knowledge Atlas— the first of China’s so-called “AI tigers” to go public, climbing 4.4% and 17%, respectively.
Silver is being boosted by expectations of interest rate cuts, a weaker US dollar, and increasing geopolitical tensions.
Limited supply combined with record-high industrial demand make silver very responsive to changes in market risk sentiment.
Staying above $83.36 maintains potential for further gains, while dips toward $75 are likely to draw in buyers.
Silver kicks off the week with robust momentum, fueled by multiple factors converging simultaneously. Safe-haven demand is increasing due to geopolitical tensions, the broader economic environment supports expectations of US interest rate cuts, and supply remains constrained amid strong industrial demand.
As a metal that bridges both precious and industrial categories, silver typically reacts more quickly than many other assets to changes in market risk sentiment.
Interest Rates, US Dollar, and Risk Sentiment Are Aligning Together
Last week’s US December jobs report indicated a cooling labor market. Non-farm payrolls increased by only 50,000, while the unemployment rate fell to 4.4%, revealing softer underlying growth despite the headline figures.
This data boosted market expectations for an earlier Federal Reserve interest rate cut. As rate cut bets rose and the US dollar weakened, demand grew for non-yielding assets like silver, giving prices fresh support.
At the same time, increased judicial scrutiny of Jerome Powell and escalating tensions between the Federal Reserve and the administration have added more pressure on the US dollar. Rising political and institutional uncertainty has driven investors toward safe-haven assets, a trend that often causes sharper price swings not just in gold but also in silver, which typically experiences greater volatility.
Safe Haven Demand Returns to Center Stage
Uncertainty in the Middle East and global politics continues to drive safe haven demand in commodity markets. Rising protests in Iran and renewed tensions between Tehran and the US have pushed investors toward gold and silver.
Recent moves by the Trump administration involving Venezuela and Iran, including plans for Venezuelan oil exports and new sanctions threats, have added further uncertainty. In this context, silver’s rebound above $80 an ounce shows how quickly changes in risk sentiment impact prices. Ongoing geopolitical risks from the Russia-Ukraine war and the Gaza conflict also reinforce the environment supporting strong demand for safe haven assets.
Industrial Demand and Supply Challenges
Attributing silver’s rise solely to macroeconomic and geopolitical factors overlooks a key part of the picture. Industrial demand for silver is projected to hit record highs in 2025 and remain strong into 2026. Currently, about 58% of global silver demand comes from industrial uses, driven by rapid growth in sectors like solar panels, electric vehicles, electronics, and AI-related hardware.
This evolving demand profile is making silver a more strategic commodity, which helps explain why its prices often react faster and with greater volatility when risk appetite or commodity exposure shifts.
On the supply side, constraints persist. Only around 27% of silver production comes from primary silver mines; the majority is a byproduct of copper, lead, zinc, and gold mining, limiting the ability to quickly ramp up output. Following several years of supply deficits from 2021 to 2024, total silver supply in 2025 is estimated at about 813 million ounces, compared to demand of roughly 1.24 billion ounces.
Inventories in London, China, and the United States have dropped to low levels, underscoring the tight market conditions. China’s new export licensing system, implemented on January 1, has added extra pressure by complicating shipments, particularly for smaller producers. Meanwhile, silver’s designation as a critical mineral in the US, along with consistent physical buying in China and India, continues to bolster fundamental demand.
Silver’s Technical Outlook
On the daily chart, silver spent much of last week trading sideways between $74.66 and $83.36 while maintaining its overall uptrend. This consolidation above the rising trendline suggests a temporary pause rather than a reversal. Strong buying interest near $74 late last week, followed by a renewed push toward new highs this week, indicates that short-term momentum has shifted back to the buyers.
Technically, the $83.36 level is crucial. A decisive break and sustained trading above this point would turn previous resistance into support. As long as silver stays above $83.36, any pullbacks are likely profit-taking rather than a trend change, keeping the bullish outlook intact.
In this scenario, silver could pick up pace toward the Fibonacci extension targets at $87, $88.76, and $91.28. Holding above $91 would further strengthen the case for a run toward the psychological $100 mark, with a potential next target around $103.63 if momentum continues.
Momentum indicators back this positive outlook. The Stochastic RSI has been hovering near oversold levels, increasing the chance of an upside signal if silver stays above $83.36. The moving averages remain bullish, with short-term exponential moving averages trending upward and price holding above the 8-day EMA at 78.56 and the 21-day EMA at 73.20, reinforcing the prevailing upward trend.
On the downside, daily closes below $83 would raise concerns about breaking the short-term rising trend. In that case, the first support to watch is 78.56, aligning with the 8-day EMA. If that fails, the 74.50 to 74.66 zone becomes crucial, marking the base of recent consolidation and a key Fibonacci retracement level.
A decisive break below this support band could lead to a deeper correction toward 69.28 and potentially 64.93. However, if the broader fundamentals remain supportive—such as expectations for rate cuts, a weaker dollar, elevated geopolitical risks, and ongoing supply constraints—any pullbacks near $75 are likely to attract buyers.
In summary, fundamentals continue to favor silver, but technically, holding above $83.36 is critical to confirm the uptrend. As long as this level holds, silver’s path higher remains open for gradual gains.
The VIX 1-Day index closed below 10 on Monday, indicating that if a significant price surge follows the CPI report, it is unlikely to be driven initially by increased implied volatility. Instead, any substantial move would need to be supported by actual buying activity rather than a rise in volatility. However, volatility could still spike overnight, setting the stage for the familiar CPI-driven market reaction.
The S&P 500 appears stable for now, but I don’t believe this is the significant breakout many have anticipated since late October. Currently, the index hasn’t even fully cleared resistance at the trendline by a single bar. We witnessed similar patterns at the beginning of 2022 and 2025.
The market could keep inching up by 10, 20, or even 30 basis points, but considering the unusually low levels of both realized and implied volatility, along with one-month implied correlation at just 7, the odds aren’t in favor of a strong move. Monday’s trading volume in S&P 500 futures was so thin, it felt like December 22 all over again.
It seems the authorities have the ability to push the 3-month VIX back down to its July 2024 lows.
Perhaps those same market forces can drive the 1-month implied correlation down to 2.
Alternatively, the VXTLT bond market volatility index might decline to levels unseen since 2019.
The main takeaway is that, in my opinion, the market’s current structure is not set up for a sharp, explosive rally. While it may continue to grind upward, eventually volatility is likely to mean-revert higher, triggering a pullback similar to the one seen from late October into November.
Interestingly, despite numerous challenges in the oil market over the past four years, XLE has largely avoided a significant breakdown, instead trading mostly sideways throughout this period. If oil prices were to break out decisively and start climbing, it could signal a strong bullish trend for the sector. Currently, XLE is approaching a critical resistance level and merits close attention.
This could prove significant if oil’s breakout above the downtrend sustains and prices start climbing back into the $60 range. For now, $55 seems to be a support level, and oil remains one of the few commodities yet to make a notable upward move. It’s definitely worth monitoring for potential gains.
Story continues its recovery, approaching the $3 mark after gaining 27% on Monday.
MYX Finance is nearing $6, marking its third straight day of gains within a short-term trading range.
Dash rose 3% on Tuesday, building on Monday’s nearly 6% increase, and is now testing the 200-day Exponential Moving Average (EMA).
Story (IP) is spearheading the market rally with double-digit gains in the past 24 hours, while MYX Finance (MYX) and Dash (DASH) each climb about 6%. These top performers are approaching critical resistance levels as they seek to continue their upward momentum.
Story Continues Rapid Recovery
Story edged up more than 1% Tuesday, building on Monday’s impressive 27% gain. The meme coin is on its third consecutive day of recovery and is nearing the $3.00 mark, approaching the November 6 low of $3.26, which previously acted as resistance on November 26.
If Story (IP) breaks above $3.26, it may set its sights on the 200-day Exponential Moving Average (EMA) at $4.101.
Momentum indicators on the daily chart suggest strong bullish momentum. The Relative Strength Index (RSI) stands at 79, indicating overbought conditions, while the Moving Average Convergence Divergence (MACD) continues to rise, supported by green histogram bars.
IP/USDT daily price chart.
If Story cannot break above $3.00, it may face a pullback that tests support at the 50-day Exponential Moving Average (EMA) around $2.356.
MYX Finance could struggle to surpass $6
MYX Finance is approaching resistance near $6.07, marking the upper boundary of a short-term range and aligning with the January 3 closing price. At the time of writing, MYX has gained nearly 1%, adding to the previous day’s 4% increase.
A strong close above $6.07 could propel MYX toward the January 3 high of $7.29, where it faces resistance from a trendline connecting the October 29 and November 15 highs.
From a technical standpoint, MYX Finance is showing renewed bullish momentum, with the Relative Strength Index (RSI) at 71 on the daily chart, edging into overbought territory. The MACD and its signal line also continue their upward trajectory. However, the absence of a clear trend in these indicators signals a possible risk of reversal.
MYX/USDT daily logarithmic chart.
Conversely, if MYX fails to hold above $6.07, a pullback could drive the price down toward the January 6 low of $4.58.
Dash’s Recovery Reaches 200-day EMA
Dash gained 3% as of Tuesday, building on a 6% increase from the previous day. The privacy-focused cryptocurrency is recovering from a December 23 low of $36.68 and is now nearing the 200-day Exponential Moving Average (EMA) at $41.30.
If Dash surpasses this level, it could next aim for the 50-day EMA at $45.04.
Technical indicators on the daily chart point to a revival in buying interest. The Relative Strength Index (RSI) at 46 is approaching the midpoint, signaling a rebound from last week’s decline, while the MACD has crossed above its signal line, reflecting renewed bullish momentum.
DASH/USDT daily price chart.
On the downside, if DASH fails to break above $41.30, it may pull back to retest the $36.68 support level.
Bitwise’s Chief Investment Officer, Matt Hougan, criticized the notion that Bitcoin is unsuitable for investment and 401(k) plans due to its volatility, pointing out that certain stocks can experience even greater price fluctuations.
Hougan’s remarks came on the same day that U.S. Senator Elizabeth Warren urged the Securities and Exchange Commission (SEC) to clarify how it plans to manage the risks associated with including cryptocurrencies in retirement funds.
In August of last year, U.S. President Donald Trump signed an executive order directing the Labor Department to reconsider restrictions on alternative assets in defined-contribution plans, potentially allowing cryptocurrencies to be included in 401(k) retirement accounts.
In a Monday interview with Investopedia Express Live, Matt Hougan criticized previous efforts by management firms like Vanguard and regulatory advice discouraging Bitcoin’s inclusion in 401(k)s as “ridiculous.”
“This is simply another asset class. Yes, it experiences price fluctuations and carries risk. However, over the past year, Bitcoin has been less volatile than Nvidia stock, yet there are no restrictions preventing 401(k) providers from offering Nvidia stock,” Hougan stated.
In 2025, Nvidia’s stock experienced a dramatic 120% price swing, dropping to around $94.31 in April before surging past $207 by October. During the same period, Bitcoin fluctuated between $76,000 and $126,080, a 65% swing. The inclusion of crypto assets in 401(k) retirement plans remains a key goal for crypto companies seeking wider retail adoption and increased legitimacy within the financial system.
Warren demands SEC answers on crypto in 401(k)
Meanwhile, U.S. Senator Elizabeth Warren is pressing the SEC for clarity on how it plans to manage risks associated with 401(k) plans investing in “alternative investments” like cryptocurrencies.
In an open letter released Monday, Warren expressed concerns that including crypto in retirement accounts may not benefit participants due to higher fees and expenses typically associated with these assets, alongside crypto’s inherent volatility.
“For most Americans, their 401(k) is a crucial source of retirement security, not a venue for risky financial speculation. Introducing crypto into these accounts could expose workers and families to significant losses,” she warned.
Warren has called on SEC Chair Paul Atkins to confirm by January 27 whether the regulator considers volatility when valuing crypto holdings of publicly traded companies.
She also seeks information on whether the SEC has evaluated manipulative practices in crypto markets and if it plans to publish research and educational materials to improve investor awareness.
Cryptocurrency Inclusion in 401(k) Plans Will Become Standard Over Time
Beyond President Trump’s executive order, in May the Department of Labor’s Employee Benefits Security Administration took a neutral position on cryptocurrency in 401(k) plans. They neither endorsed nor opposed it, having withdrawn a 2022 compliance guidance that previously discouraged crypto investments in retirement accounts.
Hougan noted that while it’s uncertain whether 401(k) providers will begin investing in crypto during 2026, he expects it to happen eventually and become normalized.
“These institutions move slowly, but the trend is clear. Over time, crypto will be treated like any other asset — which is exactly how it should be,” he added.
With holiday decorations packed away and investment professionals back at their desks, the serious market work for 2026 is officially underway. So far, investor sentiment appears optimistic, as the S&P 500 has posted a 1.76% gain—a promising start to the year.
Looking ahead, nearly every major Wall Street firm forecasts another strong year for stocks. While leadership within the market may shift, the broad consensus remains that stock prices are poised for healthy gains in 2026.
You might wonder how this optimism holds up amid concerns about AI bubbles, geopolitical tensions, inflation, and lofty valuations. Having wrestled with this question myself, I believe it’s worthwhile to step back and review the fundamental drivers underpinning the stock market.
From my experience managing money for over 40 years, I’ve learned that while short-term market movements are nearly impossible to predict, understanding the broader macroeconomic environment helps to get the major market moves “mostly right, most of the time.” Simply put, aligning with the dominant primary market cycle is my foremost objective in this line of work.
So, without wasting any time, let’s briefly review the key macro drivers: the economy, corporate earnings, inflation, the Fed and interest rates, and, naturally, valuations.
Since there’s quite a bit to cover—and I doubt many of you want to read a 5,000-word report on a Monday morning—I’ve decided to split this analysis into several parts. Today, we’ll begin with a focus on the economy and corporate earnings.
Overview of the Economy
The U.S. economy is generally divided into three main sectors: manufacturing, consumers, and government. Of these, the consumer sector—also known as the services sector—is by far the largest, accounting for roughly 70% of overall economic activity in the United States.
Because of this, the sluggish manufacturing sector, which has been in a prolonged slowdown, is less of a concern. While an improvement there would be welcome, consumer sentiment remains the primary driver of economic growth today.
It’s also important to highlight that high-income earners now dominate consumer spending. Reports indicate that the wealthiest individuals account for just over 50%—a record high—of all U.S. consumer expenditures. These affluent consumers are less sensitive to price increases and tend to maintain their spending habits despite inflation.
Indeed, the labor market has shown signs of weakening, which could eventually affect consumer spending. However, current evidence suggests that job market softness is primarily impacting lower-income consumers at this stage. This situation remains fluid—if job losses accelerate, the services sector would likely feel the impact. But for now, this hasn’t been the case.
The key takeaway is that despite negative headlines, the economy appears to be performing well. U.S. GDP growth was strong last year, moving from a slight contraction of -0.6% in Q1 to +3.8% in Q2 and +4.3% in Q3.
More recently, the Atlanta Fed’s GDPNow model—a real-time GDP estimate—registered a robust +5.4% last week.
From my perspective, anyone claiming the economy is weak or unstable is overlooking the actual data.
Company Earnings Reports
Earnings are often described as the lifeblood of the stock market, making it crucial to stay informed about corporate profit trends. To get straight to the point, corporate earnings are very strong—remarkably so.
For example, Q3 results showed about a 15% increase, significantly surpassing analyst expectations.
Looking forward, consensus estimates from Wall Street analysts predict that S&P 500 companies will see earnings grow by approximately 17.3% in 2026. Quite impressive.
Of course, analysts rarely get their projections exactly right. Estimates often start off too optimistic and are revised downward over time. So, it would be unwise to assume that 2026 earnings per share (EPS) will definitively rise by 17% compared to last year.
The important takeaway is that EPS growth is still expected to be strong this year—significantly above the historical average. (Goldman Sachs recently released a report titled “2026: An Earnings Story.”) My view is that as long as earnings come reasonably close to these expectations, there should be plenty of room for stocks to advance.
Is There Further Upside Potential?
The key question is how much further the stock indices can climb. While I’ll address valuations in the coming weeks, it’s clear to everyone that current stock multiples are quite high. This likely explains why Wall Street analysts are forecasting relatively modest gains of around 10% for the year—roughly in line with the S&P’s average annual return since 1980—even with anticipated earnings growth.
Given the strong economic outlook and expected earnings growth, it’s difficult for me to take a negative stance on the stock market.
That said, it might be prudent to temper enthusiasm somewhat due to elevated valuations. However, from a broader perspective, I believe the best approach is to stay on the bullish path and trust the market leaders to navigate any near-term challenges.
What shapes our lives are the questions we ask, refuse to ask, or never think to ask.
Gold futures have entered a crucial expansion phase, with prices accelerating beyond key VC PMI levels on both daily and weekly charts, indicating momentum-driven growth rather than a mean-reversion scenario. The 15-minute /GC chart shows prices breaking through the VC PMI Daily Mean near $4,496 and pushing above the Sell 1 Daily level at $4,531, confirming robust upward price acceptance. Such moves typically happen when price action and timing converge, creating what traders call “escape velocity.”
According to the VC PMI framework, the market is currently trading near the upper probability band, approaching Sell 2 Daily around $4,561 and Sell 1 Weekly near $4,567, with Sell 2 Weekly projected at about $4,633. Historically, these levels mark significant zones of exhaustion or pause, where momentum traders tend to take profits and the risk of mean reversion rises. Although strong trends can push prices beyond these points, the odds favor increased volatility followed by consolidation once these upper bands are tested.
Time cycle analysis highlights the significance of the present period. The current advance is reaching a short-term cycle peak that aligns with the mid-January rhythm, typically linked to sharp intraday moves and heightened emotional trading. When price momentum accelerates into a cycle window while nearing VC PMI sell bands, markets often shift from trend continuation to sideways rotation. This doesn’t signal a major top but does indicate a high-risk zone for initiating new long positions, emphasizing the need for disciplined trade management.
From the Square of 9 perspective, the current price range corresponds with significant harmonic rotations stemming from previous major swing lows. The $4,560–$4,640 zone marks an important angular relationship where price, time, and geometric factors intersect. Such geometric convergence points often serve as critical decision areas, influencing whether the market pauses, pulls back to the VC PMI mean, or accelerates into a larger upward move.
In summary, gold maintains its bullish structure but is currently trading within a statistically and geometrically significant high zone. Traders are advised to focus on risk management, gradually take profits, and consider the likelihood of mean reversion around the VC PMI levels, while closely watching cycle developments to confirm whether the trend will continue.
USD/CHF declines as the Swiss franc benefits from increased safe-haven demand.
President Trump stated that Iran has expressed interest in negotiations following his military warnings, though he cautioned that action might occur prior to any talks.
Safe-haven demand intensifies amid growing concerns over the Federal Reserve’s independence.
USD/CHF declined for the second consecutive day, trading near 0.7970 during Tuesday’s Asian session. The pair weakened as the Swiss Franc gained support from safe-haven demand driven by geopolitical tensions and worries over the Federal Reserve’s independence.
On Sunday, U.S. President Donald Trump stated that Iran’s leadership had contacted him to seek negotiations following his military threats amid ongoing anti-government protests in the country. However, Trump cautioned that action might be taken before any formal meeting occurs.
Safe-haven demand has risen amid growing concerns over the Federal Reserve’s independence after federal prosecutors threatened to indict Chair Jerome Powell regarding his congressional testimony on a building renovation—an action Powell called an attempt to undermine the central bank’s autonomy.
However, downside pressure on the USD/CHF pair may be limited as the US Dollar maintains strength ahead of the December Consumer Price Index (CPI) release later in the day, which could provide new insights into the Fed’s policy direction.
Markets currently expect two rate cuts from the Federal Reserve this year, beginning in June, though a stronger-than-expected inflation report could reduce the likelihood of easing. December’s Nonfarm Payrolls (NFP) came in below expectations, supporting a more dovish Fed stance. According to the CME Group’s FedWatch tool, there is a 95% chance that the Fed will keep interest rates unchanged at its January 27–28 meeting based on fed funds futures pricing.
On Tuesday, Cardano’s price approached a crucial support level at $0.38 after failing to break above the 50-day EMA at $0.41 last week.
Metrics from on-chain data and derivatives present a mixed picture: selective accumulation by whales and an increase in long positions contrast with negative funding rates and falling social dominance.
From a technical perspective, a rebound is possible if the $0.38 support holds, but a confirmed drop below this level could indicate a more significant correction.
On Tuesday, Cardano (ADA) price approached an important support level at $0.38, following rejection from the 50-day Exponential Moving Average (EMA) last week. Market indicators present a mixed picture: selective whale accumulation and increasing long positions point to underlying demand, while negative funding rates and decreasing social dominance reflect cautious market sentiment. Technically, ADA stands at a critical juncture—holding above support may lead to a price rebound, whereas falling below could trigger a more significant downturn.
Investor sentiment remains mixed
Data from Santiment’s Supply Distribution indicates a bullish sentiment for Cardano, with some whales accumulating ADA during recent price declines.
The data reveals that whales holding between 10 million and 100 million ADA tokens (represented by the blue line) have collectively acquired 180 million ADA from January 8 through Tuesday. Meanwhile, another group of whales holding between 1 million and 10 million ADA tokens (yellow line) and those with 100,000 to 1 million tokens (red line) have offloaded a total of 50 million tokens during the same period.
This suggests that the second group of whales may have experienced a capitulation event, while the first group capitalized on the opportunity to accumulate Cardano at discounted prices.
Cardano supply distribution chart. Source: Santiment
Coinglass reported that ADA’s long-to-short ratio reached 1.33 on Tuesday, marking its highest point in more than a month. A ratio above one indicates that a majority of traders are anticipating a price increase for Cardano.
Cardano’s long-to-short ratio chart. Source: Coinglass
Cardano’s social dominance measures the proportion of ADA-related conversations within the cryptocurrency media, currently signaling a bearish outlook. According to Santiment, ADA’s share of crypto media discussions stands at 0.037%, the lowest since early December, and has been steadily decreasing since early January. This downward trend reflects diminishing investor interest and lower speculative activity, which often correlates with weaker demand and reduced short-term price momentum.
Cardano Social Dominance chart. Data source: Santiment
Additionally, Cardano’s funding rates dropped into negative territory on Tuesday, as shown in the Coinglass chart below. Negative funding rates mean that short positions are paying long holders, signaling bearish sentiment toward ADA.
Cardano’s funding rate chart. Source: Coinglass
Cardano price outlook: ADA approaches critical $0.38 support level
On January 6, Cardano’s price was rejected at the 50-day EMA near $0.41 and subsequently dropped by almost 9% through Monday, retesting the daily support level at $0.38. As of Tuesday, ADA remains close to this key support.
A daily close below $0.38 could signal a further decline toward the December 31 low of $0.32.
The Relative Strength Index (RSI) on the daily chart is stabilizing around the neutral 50 level, reflecting trader indecision. Additionally, the Moving Average Convergence Divergence (MACD) lines are converging, which also points to a lack of clear direction.
ADA/USDT daily chart
If the $0.38 daily support level holds firm, ADA may rebound toward the 50-day EMA at $0.41.
Most Asian currencies weakened on Tuesday, with the Japanese yen falling to a one-year low, as higher oil prices fueled by unrest in Iran pressured the region. Meanwhile, new political and trade developments in the United States dampened investor sentiment.
The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, rose 0.1% after a slight decline in the previous session. Dollar Index futures were also up 0.1% as of 03:36 GMT.
Japan’s currency drops to a one-year low following news of a possible snap election
The yen was the worst-performing currency, as USD/JPY climbed 0.4% to 158.76, its highest level since January 2025. The currency came under pressure after reports suggested that Prime Minister Sanae Takaichi could call a snap election as early as February. Investors speculated that a potential election win would strengthen her mandate for expansionary fiscal policies, further weighing on the yen.
Markets focus on Trump’s tariff threat, unrest in Iran, and higher oil prices
Risk appetite across Asia stayed cautious following U.S. President Donald Trump’s announcement of a 25% tariff on goods from countries “doing business” with Iran, though specifics on timing and coverage remain unclear.
Meanwhile, oil prices rose further amid deadly anti-government protests in Iran, sparking concerns over potential supply disruptions. The unrest has also led to warnings of possible military intervention from Trump, heightening geopolitical risk premiums.
MUFG analysts noted that Asian currencies may have been negatively affected by recent rises in oil prices, driven by events in both Venezuela and Iran.
They added that, aside from China, countries like Turkey, the United Arab Emirates, and to a lesser extent Russia and India, maintain some trade connections with Iran.
In Asia, the South Korean won (USD/KRW) rose 0.4%, marking its seventh consecutive gain. The Indian rupee (USD/INR) increased slightly by 0.1%, while the Singapore dollar (USD/SGD) remained stable. In China, the onshore yuan (USD/CNY) showed little movement, whereas the offshore yuan (USD/CNH) edged up 0.1%. The Australian dollar (AUD/USD) traded mostly flat.
Concerns over Fed independence trigger risk-averse sentiment
The Trump administration has launched a criminal probe into Federal Reserve Chair Jerome Powell regarding his testimony about renovation activities at the central bank’s headquarters, raising concerns about the Fed’s independence.
In response, Powell issued a statement affirming the Fed’s autonomy and assuring that policy decisions will remain based solely on economic data and the central bank’s mandate. Several former Fed chairs and senior officials have publicly expressed their support for Powell.
“It’s a wait-and-see situation as markets attempt to gauge the actual impact of these developments,” noted analysts from ING in a recent report.
Despite a softer U.S. dollar, Asian currencies found it difficult to gain, as investors remained focused on broader U.S. political risks, trade uncertainties, and rising oil prices.
Focus is also shifting to upcoming U.S. economic reports and any indications from the Federal Reserve, as market participants reevaluate interest rate forecasts amid increased political scrutiny of the central bank.
If economists were meteorologists, this week’s forecast would predict a data blizzard. However, clarity is expected to improve as markets receive highly anticipated reports on inflation, retail sales, and industrial production ahead of the Federal Reserve’s policy meeting on January 28.
Few economists expect Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) to ease monetary policy again later this month—and neither do we. This week’s data could either confirm or challenge that view, starting with the December consumer price index report on Tuesday.
The Fed drama intensified last week after President Donald Trump instructed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds—an action typically undertaken by the Fed itself. Many saw this move as an attempt to restart quantitative easing. Meanwhile, Fed Governor Stephen Miran told Bloomberg he anticipates 150 basis points of rate cuts this year.
What’s still missing, however, is significantly lower inflation and a recession that would justify such aggressive easing. This week will also feature speeches from several Fed officials, which could provide insight into the central bank’s thinking. The lineup starts with New York Fed President John Williams on Monday, followed by Governors Miran (Wednesday), Michael Barr (Thursday), Michelle Bowman (Friday), and Vice Chair Philip Jefferson (Friday).
Here’s a rundown of this week’s key data releases likely to influence the timing and scale of any future Fed rate cuts:
Inflation
Since the 43-day government shutdown in October and November, investors have struggled to gauge inflation accurately. The 2.7% year-over-year CPI rise in November, a slight dip from October’s 3.0%, was met with caution, as the shutdown likely disrupted the Bureau of Labor Statistics’ data gathering.
This increases the importance of the upcoming CPI and PPI reports, which will be key indicators before the FOMC’s January 28 interest rate decision.
The upcoming CPI report on Tuesday is expected to show a modest easing in inflation, with the Cleveland Fed’s model forecasting a 0.2% monthly increase and 2.6% year-over-year growth. The November PPI report, due Wednesday, is considered less impactful, while import and export price data for November will be released on Thursday.
Retail sales
Retail sales (Wednesday) are expected to show a slight increase in November after remaining flat in October (see chart). Overall, we believe consumer spending remains resilient despite rising living costs and soft employment figures. Additional important demand indicators this week include December existing home sales (Wednesday) and mortgage applications for the week ending January 9 (Wednesday).
Jobless claims
We anticipate layoffs will stay minimal, which has been the key insight from recent initial unemployment claims data (Thursday) (see chart). While demand for labor may be slowing in certain sectors, the feared AI-driven collapse in the job market has not materialized yet.
Composite economic indicators & business surveys
The composite cyclical indicators for December, due Thursday, are expected to show the coincident index holding at a record high, while the (mis)leading index continues its decline. Additionally, given delays in official hard data, the National Federation of Independent Business’ Small Business Optimism Index for December (Tuesday) should provide valuable insights, following its rise to 99 in November. Later in the week, the Federal Reserve banks of New York and Philadelphia will release their January business surveys (Thursday).
Our preferred coincident indicator is the S&P 500 forward earnings per share, which has accelerated in recent weeks and hit record highs (see chart).
Bitcoin’s price trend moved differently as Nasdaq futures dropped by nearly 0.8%.
Bitcoin increased by 1% amid growing tensions between President Trump and Fed Chairman Powell, which rattled markets and led to declines in U.S. stock futures and the dollar. Powell described the legal challenge as politically driven, intended to pressure the central bank into aggressive interest rate cuts. However, prediction markets do not anticipate this conflict resulting in Powell leaving his position prematurely.
Bitcoin climbed 1% Monday afternoon Hong Kong time as escalating tensions between President Donald Trump and Federal Reserve Chairman Jerome Powell unsettled investors, pushing both U.S. stock futures and the dollar index down.
Bitcoin reached $92,000 but remained within last week’s range of $89,000 to $95,000, according to CoinDesk data. Meanwhile, Nasdaq futures declined 0.8%, S&P 500 futures dropped 0.5%, and the dollar index eased to 99.00 from Friday’s high of 99.26.
Typically, BTC tends to follow the Nasdaq’s movements, but this time it diverged, suggesting growing safe haven demand for the cryptocurrency as investors seek a “hideout” amid the intensifying Trump-Powell conflict. Supporters of BTC have long praised it as an anti-establishment asset and a safeguard against reckless fiscal and monetary policies. Meanwhile, gold, a classic safe haven, also climbed to a record high of $4,600 per ounce.
Tensions between the Federal Reserve and the White House intensified over the weekend after Powell revealed that the Trump administration had threatened him with a criminal indictment related to the renovation of the Fed’s headquarters.
Powell dismissed the indictment as politically motivated, aimed at pressuring the Fed into cutting interest rates.
Trump has long been critical of Federal Reserve policies, especially its hesitance to aggressively lower rates to stimulate economic growth. Since taking office in 2025, he has frequently pushed Fed Chair Jerome Powell to reduce rates more sharply, labeling him a “numbskull” and threatening to make changes to increase White House influence over monetary policy.
Trump has consistently called for interest rates to fall to 1% or below. Although the Fed cut rates by 25 basis points last month to 3.5%, it is expected to hold steady at least until March and is unlikely to return to ultra-low levels anytime soon.
Despite the escalating attacks from Trump’s team, prediction markets do not anticipate an early departure for Powell, whose term ends in May this year.
However, persistent assaults on central banks, especially amid ongoing inflation, can undermine investor confidence and destabilize the domestic currency.
The sharp decline of Turkey’s lira in recent years, triggered by President Recep Tayyip Erdogan’s interference with central bank independence, stands as a cautionary example. Still, the dollar’s position as the global reserve currency makes a severe collapse in the U.S. less likely.
The Australian Dollar ended its three-day slide on Monday.
ANZ reported a 0.5% decline in job advertisements for December, following a revised 1.5% drop in the previous month.
Meanwhile, the US Dollar weakened after federal prosecutors launched a criminal investigation into Federal Reserve Chair Jerome Powell.
The Australian Dollar (AUD) gained ground against the US Dollar (USD) on Monday, reversing a three-day losing streak. The AUD/USD pair rose as the Greenback weakened, partly due to growing concerns about the Federal Reserve.
Federal prosecutors have launched a criminal investigation into Fed Chair Jerome Powell, focusing on the central bank’s renovation of its Washington headquarters and allegations that Powell may have misled Congress about the project’s details, according to a New York Times report on Sunday.
ANZ Job Advertisements fell by 0.5% in December, following a revised 1.5% decline in November. Meanwhile, household spending rose 1.0% month-on-month in November 2025, slowing from a revised 1.4% increase in October, reflecting consumer caution amid high interest rates and ongoing inflation.
Australia’s mixed Consumer Price Index (CPI) report for November has left the Reserve Bank of Australia’s (RBA) policy direction uncertain. However, RBA Deputy Governor Andrew Hauser stated that the inflation data largely met expectations and indicated that interest rate cuts are unlikely in the near term. Attention now turns to the quarterly CPI report due later this month for clearer insight into the RBA’s upcoming policy decisions.
US Dollar Slides Amid Federal Reserve Uncertainty
The US Dollar Index (DXY), which tracks the Dollar against six major currencies, is weakening and trading near 98.90 amid expectations of a dovish Federal Reserve. Slower-than-anticipated US job growth in December suggests the Fed may keep interest rates steady at its upcoming January meeting.
US Nonfarm Payrolls increased by 50,000 in December, below November’s revised 56,000 and the expected 60,000. Meanwhile, the unemployment rate fell to 4.4% from 4.6%, and average hourly earnings rose to 3.8% year-over-year from 3.6%.
CME Group’s FedWatch tool shows about a 95% chance that the Fed will hold rates steady on January 27–28. Richmond Fed President Tom Barkin welcomed the unemployment drop, describing job growth as modest but steady. He noted hiring remains limited outside healthcare and AI sectors and expressed uncertainty about whether the labor market will see more hiring or layoffs going forward.
US Treasury Secretary Scott Bessent told CNBC on Thursday that the Federal Reserve should continue cutting interest rates, emphasizing that lower rates are the “only ingredient missing” for stronger economic growth and urging the Fed not to delay.
The US Department of Labor reported that Initial Jobless Claims rose slightly to 208,000 for the week ending January 3, just below expectations of 210,000 but above the previous week’s revised 200,000. Continuing claims increased to 1.914 million from 1.858 million, signaling a gradual rise in those receiving unemployment benefits.
The Institute for Supply Management (ISM) revealed that the US Services PMI climbed to 54.4 in December from 52.6 in November, surpassing expectations of 52.3.
ADP data showed a gain of 41,000 jobs in December, improving from a revised 29,000 job loss in November, though slightly below the expected 47,000. Meanwhile, JOLTS job openings dropped to 7.146 million in November from a revised 7.449 million in October, missing forecasts of 7.6 million.
China’s Consumer Price Index (CPI) increased by 0.8% year-over-year in December, up from 0.7% in November but slightly below the 0.9% forecast. On a monthly basis, CPI rose 0.2%, reversing November’s 0.1% decline. Meanwhile, China’s Producer Price Index (PPI) fell 1.9% year-over-year in December, improving from a 2.2% drop the previous month and slightly beating expectations of a 2.0% decline.
Australia’s trade surplus narrowed to 2.936 billion AUD in November, down from a revised 4.353 billion AUD in October. Exports declined 2.9% month-on-month in November, following a revised 2.8% increase the previous month. Imports edged up 0.2% in November, slowing from a revised 2.4% gain in October.
AUD rebounds, testing upper boundary of rising channel around 0.6700
On Monday, AUD/USD trades near 0.6700 as the pair attempts a rebound toward an ascending channel, indicating a renewed bullish outlook. The 14-day RSI at 58.33 remains above the neutral midpoint, supporting upward momentum.
A sustained move back into the channel would reinforce the bullish trend, potentially pushing the pair toward 0.6766—the highest level since October 2024. Further upside could target the channel’s upper resistance near 0.6860.
Immediate support is found at the nine-day EMA around 0.6700, followed by the 50-day EMA at 0.6631. A break below these levels could open the path to 0.6414, the lowest point since June 2025.
GBP/USD inched up to around 1.3430 during Monday’s early European session.
The market remains cautious as federal prosecutors launch a criminal investigation into Fed Chair Powell.
With the RSI lingering near the midline, further consolidation is possible in the short term.
Key support to watch is at 1.3358, while immediate resistance is seen near 1.3458.
The GBP/USD pair found some buying interest around 1.3430 during Monday’s early European trading session. The US Dollar weakened against the British Pound following Federal Reserve Chair Jerome Powell’s revelation that President Donald Trump threatened him with a criminal indictment, sparking concerns about the Fed’s independence.
The US Justice Department issued subpoenas and threatened criminal charges linked to Powell’s Senate testimony regarding renovations at Federal Reserve buildings. Powell described the investigation as “unprecedented” and suggested it was motivated by Trump’s frustration over his refusal to lower interest rates despite the president’s repeated public pressure.
Ray Attrill, head of currency strategy at National Australia Bank, commented, “This open conflict between the Fed and the U.S. administration clearly doesn’t bode well for the U.S. dollar.”
Traders will be paying close attention to UK jobs data due Tuesday, as the results could provide insights into market expectations for the Bank of England’s monetary policy. Weaker-than-expected figures might put short-term pressure on the British Pound (Cable).
GBP/USD Technical Analysis
On the daily chart, the 100-day EMA is trending upward, offering support at 1.3358, with the price maintaining above this key moving average to sustain the broader bullish outlook. The RSI at 51.90 is neutral but trending slightly higher, indicating momentum is stabilizing following a recent pullback. Holding above the EMA could set the stage for a retest of resistance at 1.3458, preserving the recovery trend.
The price currently trades just below the Bollinger Bands’ middle line at 1.3458, with the bands narrowing, signaling lower volatility and a consolidation phase. The RSI near 52 confirms a range-bound environment. A decisive move above the mid-band would increase upward momentum, potentially targeting the upper band at 1.3552. Conversely, a drop toward 1.3365 would bring the lower band into focus, risking a deeper correction.
Gold has drawn buyers for the third consecutive day, supported by escalating geopolitical tensions that increase safe-haven demand.
Worries over the Federal Reserve’s independence are weighing on the US Dollar, providing additional support to the XAU/USD pair.
However, diminished expectations for further Fed rate cuts could limit gold’s upside ahead of important US inflation data.
Gold (XAU/USD) continues to trade with a bullish bias near record levels, holding just under the $4,600 mark reached earlier this week as investors seek safety amid persistent geopolitical tensions and concerns about the Federal Reserve’s independence. Escalating unrest in Iran and broader global risks have kept safe‑haven demand elevated, supporting bullion’s strong performance.
At the same time, worries over the U.S. central bank’s autonomy have weighed on the U.S. Dollar, encouraging flows into non‑yielding assets like gold. However, expectations that rate cuts may be less aggressive could temper upside momentum ahead of key U.S. inflation data due out this week.
Daily Market Movers: Gold Boosted by Safe-Haven Appeal and Softening USD
Following a significant U.S. operation in Venezuela earlier this month, President Donald Trump announced that Washington would oversee the country’s administration during a transitional period after Venezuelan leader Nicolás Maduro was captured — even posting an image on social media depicting himself as the “Acting President of Venezuela.”
Geopolitical risks remain elevated globally. Protests in Iran, which have resulted in hundreds of deaths, continue to unsettle markets, while the ongoing Russia–Ukraine conflict — including confirmed strikes on Russian oil infrastructure — adds further supply‑side pressure.
In Asia, rising tensions between China and Japan have intensified after Beijing restricted exports of rare earths and rare‑earth magnets in response to Tokyo’s recent political remarks. These developments have helped push gold toward fresh all‑time highs as investors seek safe‑haven assets.
On the monetary policy front, U.S. Federal Reserve Chair Jerome Powell has defended the central bank’s independence after threats of a criminal indictment linked to a Senate testimony, emphasizing that rate‑setting should be based on economic evidence rather than political pressure.
Recent U.S. jobs data showed a smaller‑than‑expected increase in nonfarm payrolls and a falling unemployment rate, which has tempered expectations for aggressive rate cuts by the Fed this year — a factor that has weighed on the U.S. dollar and supported flows into gold.
With no major U.S. economic data scheduled for Monday, markets are likely to remain sensitive to comments from Federal Open Market Committee (FOMC) members, while this week’s U.S. inflation figures will be a key focus for traders.
Gold’s Technical Outlook Remains Bullish Despite Overbought RSI Signals
From a technical standpoint, gold’s recent rise over the past month has formed an upward-sloping channel, signaling a solid short-term uptrend that supports bullish momentum for XAU/USD. The price remains above the ascending 200-period Simple Moving Average (SMA), reinforcing the positive trend and providing dynamic support near the $4,320–$4,325 zone.
The MACD indicator shows the line staying above the Signal line in positive territory, with an expanding histogram indicating strengthening bullish momentum.
However, the Relative Strength Index (RSI) at 71.82 suggests overbought conditions, which could limit immediate upside and lead to some consolidation near the channel’s upper boundary.
Any pullback is likely to find support near the channel’s lower boundary around $4,365, with the rising 200 SMA further underpinning the overall bullish outlook. Maintaining momentum above these support levels would keep the upward trend intact, while a decisive break above the channel resistance could trigger a fresh rally toward higher levels.
WTI prices rise amid growing supply concerns linked to escalating unrest in Iran.
President Trump has warned Tehran against using force on protesters, while Iran has warned the U.S. and Israel against any intervention.
However, oil price gains may be capped due to anticipated resumption of Venezuelan exports and forecasts of a potential market oversupply.
West Texas Intermediate (WTI) crude extended its gains for a third consecutive session, trading around $59.10 per barrel during Asian hours on Monday. The rise in oil prices is driven by growing supply concerns amid escalating protests in Iran. As OPEC’s fourth-largest producer, exporting nearly 2 million barrels per day, any conflict escalation poses a significant risk to global supply.
The unrest, now in its third week and having reportedly resulted in hundreds of casualties, has prompted Iranian authorities to signal a harsher crackdown. Meanwhile, U.S. President Donald Trump warned Tehran against using force on protesters and suggested possible intervention if the situation worsens, while Iranian officials cautioned against any U.S. or Israeli involvement.
Oil price gains may be restrained by expectations that Venezuelan crude exports could resume following political changes in the country, with the U.S. poised to receive or manage up to 50 million barrels of sanctioned oil under a new arrangement with interim authorities. This potential influx of supply has tempered some of the upside from geopolitical risk.
However, uncertainty remains over the timing and scale of Venezuelan shipments, as shifting U.S. policy and the logistics of restarting exports from dilapidated ports and vessels cloud the outlook for actual flows.
Meanwhile, traders are watching for possible supply disruptions from Russia amid ongoing Ukraine attacks on energy infrastructure and the prospect of tougher U.S. sanctions on Russian energy exports — factors that could add upward pressure on prices if they materially reduce output.
USD/CAD pulls back toward 1.3890 following an unsuccessful attempt to continue its nine-day rally.
Criminal indictment threats against Fed Chair Powell have put pressure on the US Dollar.
An increasing unemployment rate in Canada is expected to weigh on the Canadian Dollar.
The USD/CAD pair declined on Monday, ending its nine-day winning streak, and corrected to around 1.3890 as the US Dollar retraced following criminal charges against Federal Reserve Chair Jerome Powell.
At the time of reporting, the US Dollar Index (DXY), which measures the Greenback against six major currencies, was down 0.22% to approximately 98.90, retreating from a fresh monthly high of about 99.26 reached last Friday.
On Friday, the U.S. Department of Justice issued a subpoena to the Federal Reserve concerning Chair Jerome Powell’s Senate testimony last June, which involved a multiyear renovation project of historic buildings with an estimated cost of $2.5 billion.
Powell responded by stating that the charges are not related to his testimony or the renovation project, but rather serve as a pretext.
Meanwhile, the Canadian Dollar (CAD) remains under pressure as the unemployment rate rose to 6.8%, exceeding estimates of 6.6% and the previous 6.5% reading. The higher jobless rate may increase expectations that the Bank of Canada (BoC) will soon resume monetary easing.
USD/CAD technical analysis
USD/CAD is trading lower around 1.3890 on Monday. The 20-day Exponential Moving Average (EMA) has started to rise, currently at 1.3806, with the price holding above this level, supporting a short-term recovery outlook.
The 14-day Relative Strength Index (RSI) stands at 61, indicating solid positive momentum after bouncing back from oversold levels.
Measured from the recent high of 1.4140 to the low at 1.3643, the 50% Fibonacci retracement at 1.3891 serves as immediate resistance. Above this, the 61.8% retracement near 1.3950 may cap further upward movement. If the pair fails to break through these resistance levels, the recovery could remain limited, with pullbacks likely to find initial support at the rising 20-day EMA around 1.3806.
This week, market attention will be on CPI inflation figures, retail sales data, and the kickoff of the Q4 earnings season.
Morgan Stanley is expected to see gains driven by robust quarterly results.
Meanwhile, Capital One Financial is likely to face challenges due to a proposed cap on credit card interest rates.
The stock market closed the first complete trading week of 2026 with the Dow Jones Industrial Average and S&P 500 reaching record levels, buoyed by the latest employment report.
Wall Street’s major indexes enjoyed a strong week, with the Dow Jones Industrial Average rising 2.3%, the S&P 500 gaining 1.6%, the tech-focused Nasdaq Composite climbing 1.9%, and the small-cap Russell 2000 soaring 4.6%.
Looking ahead, the upcoming week promises significant market activity as investors assess economic prospects and interest rate trends.
Key events on the economic calendar include Tuesday’s U.S. consumer price inflation report for December, which could trigger market volatility if the data exceeds expectations. This report will be released alongside producer price figures, offering a broader view of inflation, as well as the December retail sales numbers.
Additionally, the Q4 earnings season is about to begin, featuring major companies such as JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, BlackRock, Delta Air Lines, and Taiwan Semiconductor set to report their results.
Additionally, the Supreme Court may deliver a ruling on the Trump tariffs this week, after not doing so last Friday.
No matter how the market moves, below I identify one stock expected to attract buying interest and another that might face renewed selling pressure. Keep in mind, my outlook covers just the upcoming week, from Monday, January 12 to Friday, January 16.
Morgan Stanley: Top Stock Pick to Buy
Morgan Stanley is set to deliver one of the strongest earnings reports in the financial sector this quarter, fueled by a notable rebound in mergers and acquisitions, a thriving IPO underwriting business, and strong results across its core investment banking divisions.
The company will release its Q4 results before the market opens on Thursday at 7:30 AM ET. Investors anticipate significant volatility in MS shares following the announcement, with options markets pricing in a potential move of about ±4.2% post-earnings.
Analysts hold a positive outlook, with all nine recent earnings revisions reflecting upward adjustments, highlighting Morgan Stanley’s strong presence in high-growth sectors such as AI-related financing and capital markets.
Morgan Stanley is projected to earn $2.41 per share, an 8.5% increase compared to last year, while revenue is expected to rise 9.4% year-over-year to $17.72 billion. This growth is anticipated to be driven by a rebound in global mergers and acquisitions, alongside robust performance in IPO underwriting and trading revenues.
In recent quarters, Morgan Stanley has effectively increased its market share in high-margin advisory services while sustaining its leading role in equity and debt underwriting, both of which contribute significant fee income when market conditions are favorable.
Technically, Morgan Stanley’s shares closed near $186.50 on Friday, trading above key moving averages and displaying bullish momentum ahead of the earnings report. Should the company deliver strong results with an optimistic outlook, the stock could push toward $200 shortly, making it an appealing buy for investors confident in the financial sector’s continued strength.
InvestingPro’s AI-driven quantitative model assigns Morgan Stanley a ‘GOOD’ Financial Health Score of 2.65, indicating solid capital reserves, strong liquidity, and a long history of dependable dividends.
Capital One Financial: Recommended Sell
On the other hand, Capital One Financial, a leading credit card lender, is expected to face considerable selling pressure this week following President Trump’s announcement of a temporary 10% cap on credit card interest rates. This policy, designed to alleviate consumer financial strain, poses a direct threat to the profitability of lenders that depend heavily on interest income from credit cards.
Given its large consumer credit card portfolio, Capital One is particularly exposed. With average credit card interest rates typically between 20-30%, a 10% cap would wipe out most of the company’s net interest income, which forms the backbone of its overall profits.
The proposed interest rate cap poses an urgent and substantial challenge to Capital One’s financial results, forcing the company to either accept sharply lower profits or withdraw from large segments of the credit card market that would no longer be financially viable.
Even prior to this announcement, Capital One Financial was struggling with increasing charge-offs and slowing loan growth, leaving the stock susceptible to further declines.
Shares closed around $250 on Friday, but if upcoming earnings (due January 22) reveal worsening credit quality or management signals concerns about future profitability, the stock could drop to $229 or below—a decline of 8-10% from current levels.
Whether you’re a beginner investor or an experienced trader, using InvestingPro can help you discover investment opportunities while managing risks in today’s challenging market environment.
Oil prices remained mostly steady during Asian trading on Monday as investors balanced concerns over potential supply disruptions due to escalating unrest in Iran against the likelihood of more Venezuelan crude returning to the market.
As of 22:23 ET (03:23 GMT), March Brent crude futures rose slightly by 0.1% to $63.39 per barrel, while West Texas Intermediate (WTI) futures also increased by 0.1% to $59.15 per barrel. Both benchmarks had gained over 3% last week amid heightened geopolitical tensions.
Iran’s lethal protests raise fears of oil supply disruption
Markets have been closely monitoring Iran, a major oil producer in the Middle East, where widespread anti-government protests have escalated in recent days. According to rights organizations, over 500 people have died amid the unrest.
Iranian authorities have warned that U.S. military bases in the region would be targeted if Washington intervenes in support of the protesters. This threat has intensified concerns about a wider regional conflict that could disrupt oil shipments passing through the Strait of Hormuz, a critical artery for global energy supplies.
U.S. President Donald Trump adopted a tougher stance on Iran last week, declaring that the U.S. would not remain passive if Iranian forces continue harsh crackdowns on demonstrators.
“Iran, as the fourth-largest OPEC member, produces about 3.2 million barrels per day of crude oil, which represents a significant supply risk for the market,” ING analysts noted in a recent report.
Resumption of Venezuelan oil exports limits upside in oil prices
However, gains were limited by news from Venezuela, where U.S. officials indicated they might ease restrictions on the country’s oil sector. U.S. Treasury Secretary Scott Bessent said additional sanctions could be lifted as early as next week to help facilitate the sale of Venezuelan crude and support oil exports.
President Donald Trump also revealed plans for Venezuela to turn over up to 30 – 50 million barrels of previously sanctioned oil to the United States.
Despite the prospects of renewed output, major oil companies are cautious about re-entering the Venezuelan market without substantial legal and political reforms. ExxonMobil has described the country as “uninvestable” without major changes, and analysts note that firms whose assets were nationalised previously may be reluctant to return without adequate compensation.
Asian currencies remained largely steady on Monday, while the U.S. dollar weakened following the announcement of a criminal investigation involving Federal Reserve Chair Jerome Powell, casting uncertainty over the central bank’s independence.
The U.S. Dollar Index, which tracks the greenback against a basket of major currencies, declined 0.2% from its one-month peak. Meanwhile, U.S. Dollar Index futures were also down 0.2% as of 04:27 GMT.
Fed Chair Powell faces threat of indictment
Investor confidence was rattled after Powell revealed that the administration had threatened the Federal Reserve with a potential criminal indictment related to his Senate testimony about cost overruns in the Fed’s headquarters renovation.
This development weakened trust in U.S. institutions and prompted a cautious mood across global markets, dampening risk appetite in Asia.
In this environment, most regional currencies showed little movement.
The Japanese yen’s USD/JPY pair edged up 0.2%, while the Singapore dollar’s USD/SGD remained flat.
The South Korean won stood out, rising 0.7% on Monday.
In China, the onshore yuan’s USD/CNY pair was mostly unchanged, whereas the offshore yuan’s USD/CNH dipped slightly by 0.1%.
The Indian rupee’s USD/INR pair saw minimal change.
Meanwhile, the Australian dollar’s AUD/USD pair rose modestly by 0.2%.
US jobs data bolster expectations for Fed rate cuts
Investor sentiment was also shaped by U.S. economic data released last Friday, which revealed that nonfarm payroll growth in December slowed more than anticipated.
The weaker-than-expected hiring numbers have heightened expectations that the Federal Reserve may implement interest rate cuts later this year.
Market pricing now factors in at least one additional Fed rate cut in 2026, with some traders anticipating two reductions.
Attention is now turning to the U.S. consumer price index for December, due Tuesday, a key economic indicator ahead of the Fed’s upcoming policy meeting later this month.
Ankur Banerjee provides a preview of the day ahead in European and global markets. Investors remain focused on the escalating conflict between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell, who is pushing back against attempts to exert political control over the Fed and its interest rate decisions.
Meanwhile, growing turmoil in Iran—where over 500 people have reportedly been killed, according to human rights groups—adds to the geopolitical uncertainties shaping market sentiment at the start of 2026, supporting demand for safe-haven assets.
Markets opened Monday with shocking news that the Trump administration had threatened to indict Powell over his Congressional testimony last summer concerning a Fed building renovation. Powell described this as a “pretext” aimed at increasing political influence over monetary policy.
“This issue centers on whether the Fed can continue setting interest rates based on data and economic realities, or if monetary policy will instead be shaped by political pressure and intimidation,” Powell stated.
The initial market reaction saw the dollar weaken and stock futures decline, although the impact on interest rate policy remains unclear. Gold prices surged past $4,600 per ounce as investors sought refuge.
Despite the unsettling news, market responses were measured, with no signs of panic selling as investors await further clarity on the Fed’s independence and the future path of interest rates.
WASHINGTON, DC – DECEMBER 13: U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged. (Photo by Win McNamee/Getty Images)
Markets may now generally anticipate that the Federal Reserve will yield to Trump’s influence and ease interest rates freely once a new Fed chair takes over after Powell’s term ends in May. Futures pricing currently reflects expectations of two rate cuts this year.
With Japanese markets closed on Monday, no cash trading occurred in Treasuries during Asian hours. Attention will shift to the Treasury market when London trading begins.
Key events that could impact markets on Monday include: Germany’s November current account balance and the euro zone Sentix investor confidence index for January.
Most Asian markets advanced on Monday, led by Chinese AI stocks amid rising optimism about the sector, though gains were limited by mounting geopolitical and macroeconomic risks. Trading volumes across the region were also muted due to a market holiday in Japan.
Technology stocks led the session, supported by gains in Chinese AI names and by following a rally on Wall Street late Friday. Weaker-than-expected U.S. nonfarm payrolls data also offered some backing, though near-term rate expectations were unchanged.
S&P 500 futures slipped 0.5% by 00:04 ET (05:04 GMT) after reports of a U.S. government probe into the Federal Reserve, which Chair Jerome Powell said was politically driven, raised concerns about the central bank’s independence.
Meanwhile, persistent global geopolitical tensions—including protests in Iran, a U.S. incursion into Venezuela, diplomatic friction between China and Japan, and the White House’s push to acquire Greenland—continued to weigh on sentiment.
Asian tech stocks rise, led by a rally in Chinese AI shares
South Korea’s KOSPI led regional gains, rising 1.2% thanks to strength in technology and semiconductor stocks. Hong Kong’s Hang Seng index climbed 0.8%, driven by gains in tech shares, while China’s mainland indices—the Shanghai Shenzhen CSI 300 and Shanghai Composite—advanced between 0.5% and 1%.
In Hong Kong, several newly listed AI companies continued their strong momentum. Z.AI, trading as Knowledge Atlas Tech (HK:2513) and recognized as China’s first publicly listed “AI tiger,” surged 25% on Monday.
Fellow newcomer MiniMax Group Inc (HK:0100) jumped over 20%, while chipmaker Shanghai Iluvatar CoreX SemiCon Co (HK:9903) gained nearly 3%. On the mainland, Cambricon Technologies Corp Ltd (SS:688256) rose by more than 3%. Taiwan’s TSMC (TW:2330), the world’s largest contract chipmaker, saw its shares increase 1.4% following strong year-on-year December sales reported last Friday.
TSMC’s solid performance, together with NVIDIA’s (NASDAQ:NVDA) recent chip launch and positive reception at the CES trade show, bolstered investor sentiment toward AI stocks.
Nevertheless, the sector was still recovering from significant losses experienced through late 2025 amid concerns about inflated valuations and circular investment patterns in AI.
Asian stocks open 2026 with mixed performance amid tech gains and geopolitical concerns
Broader Asian equities climbed on Monday, although the region still showed a mixed performance in the early weeks of 2026. A surge in technology stocks helped lift markets, but rising geopolitical tensions around the world dampened appetite for risk assets over the past week, counterbalancing much of the tech‑led rally.
South Korea’s KOSPI and Japan’s Nikkei 225 were among the strongest performers in the opening week, and Chinese benchmarks also finished higher, while indices with less tech exposure underperformed. Singapore’s Straits Times Index gained 0.7%, continuing its advance after the government signalled potential changes to sovereign wealth fund investment rules for GIC and Temasek. Australia’s ASX 200 rose 0.5%, supported by gains in mining stocks as precious and base metals strengthened.
In contrast, India’s Nifty 50 lagged its regional peers, dropping 0.5% amid increasing uncertainty over potential new U.S. trade restrictions on New Delhi. Geopolitical developments—including a U.S. intervention in Venezuela, ongoing diplomatic tensions between China and Japan, fears of possible U.S. action against Iran, and slow progress toward a Russia‑Ukraine ceasefire—kept market sentiment cautious.
Tehran has declared it will attack Israel and U.S. military bases in the region if Washington intervenes militarily to support protesters in Iran.
Speaking before the Iranian Parliament today, Speaker Mohammad Baqer Qalibaf accused the U.S. and Israel of “supporting recent riots and causing unrest” across Iran. He warned that Israel and U.S. military bases in the region would be considered “legitimate targets” if the U.S. launches any attacks against Iran.
According to Reuters, Israeli authorities are currently on high alert due to the possibility of U.S. intervention to back the protest movement in Iran.
The New York Times quoted knowledgeable U.S. officials saying that in recent days, President Donald Trump has received reports on potential military interventions in Iran as he considers acting on his threats to attack the country over accusations of “suppressing protesters.”
While Trump has not made a final decision, officials indicate he is seriously weighing the possibility of launching strikes in response to Iran’s crackdown on demonstrations. Various options have been presented to the president, including attacks on non-military sites in Tehran.
According to sources, U.S. Secretary of State Marco Rubio spoke by phone with Israeli Prime Minister Benjamin Netanyahu on January 10 to discuss the protests in Iran, the situation in Syria, and the peace agreement in Gaza. Earlier that day, Rubio posted on social media expressing U.S. support for “the brave people of Iran.”
When asked about the New York Times report, the White House referred to President Trump’s recent public statements and social media posts.
“Perhaps Iran is closer to freedom than ever before. America is ready to help,” Trump wrote on social media on January 10.
The day before, he warned of “very strong” retaliation if Iran causes protester deaths as in previous incidents. He noted the demonstrators in Iran face “extreme danger” and said the U.S. will closely monitor developments.
“Iran better not start shooting because if they do, we will shoot back,” Trump said, but emphasized this did not mean American troops would directly deploy to Iran.
The protests, which began on December 28, 2025, sparked by small traders upset over the economic situation and the falling rial, have spread in Tehran and other cities in recent days. Iranian officials accuse “terrorist agents” from Israel and the U.S. of inciting the protests and escalating violence, claims denied by the U.S. State Department, which says Tehran is “distracting attention from internal problems.”
International organizations citing local sources report that the Iranian government has blocked nationwide information flow, cut Internet access, and limited international communications, making it difficult to assess the full scope of the protests. Some human rights groups abroad report over 100 protesters have died and more than 2,000 have been arrested since late December 2025.
Iran’s Supreme Leader Ali Khamenei declared that the government will not back down before the protests, claiming that the past two weeks of unrest are caused by agitators aiming to please the U.S. leadership. He mocked Trump’s intervention warnings, urging the U.S. president to focus on domestic issues.
Iranian Judiciary Chief Gholamhossein Mohseni Ejei warned of “severe, maximum, and merciless” punishment for rioters, while the intelligence branch of the Islamic Revolutionary Guard Corps (IRGC) vowed not to allow the protests to continue.
Every January, it’s the same story: gym parking lots are packed like a Taylor Swift concert, salad aisles get wiped clean as if there’s a lettuce shortage, and suddenly half your coworkers are quoting Warren Buffett while buying shares in companies they can barely pronounce. Yep, it’s “New Year’s Resolution Season”—that magical time when we all vow to lose weight, get fit, and save money… until Valentine’s Day rolls around.
By February, reality hits hard. That treadmill you bought has become a fancy clothes rack, your credit card bill looks like you confused “budgeting” with “shopping spree,” and that grand investing plan? It’s now a Coinbase account loaded with meme coins, a YouTube playlist of gurus, and a browser stuck on Reddit’s WallStreetBets.
So why do we do this every year? Blame it on history and human nature.
The tradition started with the Babylonians, who promised their gods to return borrowed tools—not a bad resolution, unless you were the poor soul who lent out a plow in 1900 B.C. and never got it back. Then the Romans made it official with oaths to Janus, the god of beginnings, who had two faces: one looking back at last year’s mess, the other pretending this year would be different. Fun fact: that’s where January gets its name—a month built on denial.
Back then, resolutions were about crops and keeping your ox alive. Now, it’s about getting washboard abs and beating the S&P 500 by following some “CryptoWolf69” on social media.
Why the obsession? Because average feels like failure. New Year’s resolutions give your brain a quick hit of motivation, tricking you into thinking momentum equals progress. You say you’ll track spending, invest regularly, and finally master options trading. But three weeks later, you’re impulse-buying crypto at midnight while binge-watching Shark Tank.
Here’s where it all falls apart. Resolutions don’t fail because you’re weak—they fail because they’re built on hope, caffeine, and Instagram quotes. You make grand plans after a couple of glasses of wine on New Year’s Eve but skip the hard parts—routine, discipline, and pushing through when things get tough. You want the six-pack but not the push-ups; you want the returns but not the risk management.
And investing is no different.
You promise yourself you’ll “invest for the long term.” But the moment the market dips 5%, you panic, move everything to cash, and start reading headlines like “Is This the Big One?” while watching YouTube channels declaring the apocalypse is near. Although you say retirement is a priority, you’ve never run the numbers or calculated how much you need to save. You make investment choices based on TikTok trends, then act surprised when your portfolio looks like it was managed by a teenager.
Most people don’t wreck their portfolios all at once. Instead, they do it gradually by:
Developing bad habits
Expecting motivation to last forever
Mistaking effort for consistency
By the time they realize things aren’t working, the damage is already done.
Short-term enthusiasm isn’t a strategy—it’s a mirage.
If your investment goals revolve around the calendar instead of a disciplined plan, you’re not managing money—you’re chasing a feeling. And like that unused gym membership, this approach leads to frustration. Every. Single. Time.
So, why do we keep making poor investment decisions?
Why We Keep Making the Same Mistakes
Each year, Dalbar Research publishes a report that feels like a nightmare for investors. Different year, same takeaway: we’re often the biggest obstacle to our own financial success.
The issue isn’t just about having enough money—it’s what happens in your mind. Dalbar identified nine common investing habits that can derail your returns faster than you can say “buy the dip.”
Loss Aversion – You’re so scared of losing money that you sell right before the market bounces back.
Narrow Framing – You fixate on one stock and ignore the rest of your portfolio, slowly watching it unravel.
Anchoring – You keep waiting for a stock to “return to even,” as if it owes you.
Mental Accounting – You treat your retirement fund and crypto wallet as separate universes, even when both are crashing.
Lack of Diversification – Owning five tech stocks doesn’t count as a balanced strategy.
Herding – You invest just because everyone else is, and it ends exactly how you’d expect.
Regret Aversion – You hesitate to act because you’re still haunted by selling Apple too early in 2012.
Media Response – You treat every financial headline like a crisis, even when it’s just noise.
Optimism Bias – You believe every investment will bounce back—yes, even the one currently under SEC investigation.
The biggest culprits are herding and loss aversion. Investors rush in during market highs but panic-sell at every dip. It’s like devouring a whole pizza and then blaming the scale. Yet we keep falling into these traps because markets mess with our minds. When prices climb, we convince ourselves the rally will last forever. When they fall, we believe recovery is impossible. We buy at the top, sell at the bottom, and then wonder why our portfolios never seem to grow.
That’s why you need a different kind of resolution—one grounded in the reality of how investors actually behave, not the fantasy of turning into the next Warren Buffett overnight.
Key Investor Resolutions to Consider in 2026
Let’s face it: emotions wreck portfolios. So in 2026, ditch the vague resolutions and focus on clear rules that can outsmart your worst impulses. Here’s a smarter list of resolutions designed for real investors—not fantasy league traders:
In 2026, I plan to (or at least make an effort to):
Stick to what’s working and cut losses quickly. No more waiting for a turnaround that might never come.
Respect the trend—fighting it is a quick way to lose money.
Be either bullish or bearish, but never greedy. Greed leads to losses.
Accept that paying taxes means you made a profit—and that’s a good thing.
Buy gradually, use limit orders, and don’t chase prices like it’s a Black Friday sale.
Look for real value, not companies in crisis with a slick PR team.
Diversify—because trouble always hits somewhere.
Set stop-losses, use them, and don’t argue with the results.
Do your homework before hitting “buy.”
Stay calm during market drops. Take a deep breath, then review your plan.
Treat cash as a strategic position, not a failure.
Expect market corrections and handle them maturely.
Be ready to admit mistakes instead of stubbornly doubling down.
Leave hope out of your investment decisions.
Stay flexible—stubbornness is not a strategy.
Practice patience—good results take time, not hype.
Turn off the TV, log off TikTok, and focus on data over influencers.
I try to stick to this list every year, but, like everyone, I mess up on a few points. That’s okay. The goal isn’t perfection—it’s making fewer mistakes than the year before. Investing success doesn’t come from reading motivational quotes or binge-watching market TikToks at midnight.
Just like fitness, results don’t come from buying a gym membership—they come from showing up even when it’s tough. Investing works the same way. There are no shortcuts or magic tricks, only basic rules, steady discipline, and the patience to outlast everyone else.
Want to become a better investor? Then keep your resolutions—even when the market tries to convince you otherwise.
Last year was another strong period for the world’s top technology firms, known as the Magnificent 7. While artificial intelligence clearly provided a boost, these companies’ core business performance remained robust even without AI-driven growth, continuing to deliver steady revenue increases and strengthening competitive advantages that few rivals can match. They remain central to some of the most powerful and lasting secular trends shaping the global economy. This strong foundation persists as we enter 2026, though individual positioning within the group has started to vary.
Interestingly, Meta Platforms (META) and Amazon (AMZN)—which were the two weakest performers in 2025—now appear to be among the best positioned for gains in the coming year, along with Alphabet (GOOGL). This doesn’t rule out further upside potential for the rest of the group, but it does indicate a shift in relative opportunities. Below, I detail the changing dynamics for each of the Magnificent 7 and share insights on how to approach trading them in 2026.
Amazon, Meta Platforms, and Alphabet Stocks Take Center Stage
After trailing the broader group in 2025, Amazon and Meta Platforms seem poised for a strong recovery in the coming year. Both companies continue to show steady revenue and earnings growth, but their stock prices have lagged, resulting in some of the most attractive valuations seen in years. Meta is currently trading at about 21.9 times forward earnings, while Amazon is around 30.7 times—both significantly below their historical averages. According to analyst ratings, Meta holds a Zacks Rank of #3 (Hold), indicating stable earnings revisions, whereas Amazon has a more favorable Zacks Rank of #2 (Buy).
Technical indicators also favor both Meta and Amazon. Meta’s shares have been trading within a narrow range recently, a pattern that often signals an impending breakout. Amazon shows a similar pattern but has already begun to move upward, breaking out on strong volume just yesterday.
From a fundamental perspective, both companies have strong bullish catalysts. Amazon is actively pursuing various AI-driven growth opportunities, particularly through AWS, where demand for cloud computing services remains strong. Meta has been one of the most effective users of AI in its advertising platform, converting technological advances into better monetization and higher margins. Additionally, Meta’s recent acquisition of Manus AI, though relatively low-profile, could be strategically important. Manus stands out among large language model (LLM) applications for its sophistication and may help Meta reestablish itself as a serious competitor in consumer-facing AI, an area where it has previously fallen behind.
In contrast, Alphabet was the best performer in the group last year as the market finally recognized its AI strengths. Its large language model is among the industry’s top, and its vertically integrated hardware ecosystem—centered on proprietary TPUs—provides a strong and unique competitive edge. Alphabet’s shares are now emerging from their own consolidation phase, indicating potential for further gains.
Together, these three companies present a well-rounded investment opportunity: two former laggards with improving technical and valuation setups, and one established leader continuing to deliver. In all cases, AI acts as a powerful catalyst, but not the sole basis for investment.
Nvidia and Microsoft Continue to Show Strong Potential
Microsoft (MSFT), a dominant force in global technology, has experienced a pause in its share price momentum in recent months, with little sustained progress since early summer and a slight decline during the fourth quarter. However, this consolidation seems to be settling. The stock has consistently tested a critical support level but has yet to break significantly below it, indicating that downward pressure may be easing.
On the fundamentals side, Microsoft’s outlook is strengthening. Earnings estimates have seen modest upward revisions, contributing to a Zacks Rank of #2 (Buy) for the stock. As long as the shares remain above the key support level around $470, the risk-to-reward ratio looks increasingly favorable.
Nvidia (NVDA) currently holds a Zacks Rank of #1 (Strong Buy), reflecting unanimous upward revisions to earnings estimates across various time frames. In just the past 60 days, analysts have increased next year’s EPS forecasts by about 16%, signaling continued positive surprises in its fundamentals.
The company’s valuation remains attractive relative to its growth prospects. Nvidia trades at roughly 40.1 times forward earnings, while its long-term EPS is expected to grow at an annualized rate of around 46% over the next three to five years. This results in a PEG ratio below 1—a rare and favorable setup for a company of this size.
Importantly, Nvidia is actively advancing despite its dominant position in the AI market. It is investing heavily across the entire AI technology stack, with a growing focus on next-generation architectures and inference optimization, which is set to become an increasingly lucrative area as AI workloads expand. This strategy was further supported by Nvidia’s recent acquisition and partnership with chip startup Groq, enhancing its capabilities in low-latency inference and performance-optimized chip design ahead of the upcoming Rubin architecture. These moves keep Nvidia firmly on investors’ radar.
Apple and Tesla Stocks Experience a Downward Trend
Although both Apple (AAPL) and Tesla (TSLA) experienced rallies late last year, their price trends remain concerning as we head into 2026. They are currently the only two stocks among the Magnificent 7 clearly trading in sustained downtrends, highlighting a shift in leadership within the group.
Tesla’s story remains ambitious, with Elon Musk emphasizing long-term prospects like autonomous driving and humanoid robots. However, investors are now focused more on near-term fundamentals, which have weakened. Tesla’s top-line growth has stalled since 2023, and its market share declined after being overtaken by BYD as the world’s largest EV producer last year. So far, there’s little sign of a meaningful rebound in vehicle demand.
Valuation also poses a major challenge for Tesla. It currently trades at over 200 times forward earnings and about 13 times forward sales—levels that surpass most high-growth, high-margin software firms. While Tesla has historically commanded premium valuations, slowing growth and changing market sentiment increase the risk of downside in the near to medium term.
Apple, on the other hand, doesn’t face the same fundamental risks but appears less attractive compared to its peers. The company has taken a cautious approach in the AI race, choosing not to match competitors’ aggressive infrastructure investments. Although this initially hurt sentiment amid fears Apple might fall behind, this strategy has proven more justifiable over time. Apple remains the world’s leading platform for mobile computing and consumer devices, positioning it as a key distribution channel for AI-powered applications in the future. Nevertheless, with fewer immediate catalysts and weaker momentum, Apple currently lags behind other Magnificent 7 stocks from a trading standpoint.
How Investors Can Position Themselves Within the Magnificent 7
As we enter 2026, the Magnificent 7 continue to present a wide range of opportunities. Variations in earnings momentum, technical trends, and near-term catalysts offer multiple ways for investors to engage—whether by riding the momentum of leaders or capitalizing on laggards poised for a rebound.
For investors, the key is to focus on areas where strong fundamentals align with positive price action. When approached thoughtfully, the Magnificent 7 should remain a central source of opportunity throughout 2026, not only as a group but also through the unique trajectories each company follows as the market cycle progresses.
Semiconductor Stocks to Consider Beyond Nvidia
The soaring demand for data is driving the next digital gold rush in the market. As data centers keep expanding and upgrading, the hardware suppliers behind these giants are set to become the NVIDIAs of the future.
One lesser-known chipmaker is uniquely poised to capitalize on this next phase of growth. It focuses on semiconductor products that industry leaders like NVIDIA don’t produce. This company is just starting to gain attention—exactly the kind of opportunity investors want to spot early.
Reflecting on the start of this century, the first striking observation is our national shortsightedness. After surviving Y2K and the dot-com crash in 2000, our leaders assumed the path ahead would be smooth sailing from year one onward.
However, reality proved otherwise, beginning with a series of black swan events, notably the attacks on the World Trade Center and Pentagon on September 11. While such events are inherently unpredictable, it’s remarkable that the Congressional Budget Office (CBO) economists confidently forecasted in 2001 a future of continuous budget surpluses, anticipating the complete elimination of national debt by 2011.
For reasons unknown, the CBO issues 10-year federal spending and revenue projections, despite having no solid factual or practical foundation to accurately forecast beyond a year or two—akin to trying to predict the weather a year in advance.
The January 2001 CBO report highlights this myopia. Their projections simply extended current trends indefinitely without grounding in reality. Under this unrealistic mandate, the CBO projected a cumulative surplus of $5.6 trillion for 2002–2011.
In reality, deficits over that decade totaled $6.1 trillion—a swing of $11.7 trillion. It would have been much simpler to just flip a plus sign to a minus. The projections failed to account for the soaring costs of Bush’s “War on Terror” post-9/11, which led to prolonged wars in Afghanistan and Iraq, the bursting of the real estate bubble, and massive TARP bailouts to rescue large banks.
In short, this is a summary of CBO’s flawed foresight:
The first takeaway from this bleak forecast is that the CBO economists assumed deficits would increase in a smooth, predictable fashion—almost as if they were drawing a straight line with minor fluctuations, rather than reflecting the unpredictable realities of economic growth.
A second point is that the 2003 Bush tax cuts were not the main driver of the deficits. In fact, annual deficits dropped significantly—from $413 billion in fiscal year 2004 (which began October 1, 2003) to just $161 billion in fiscal year 2007. This means the deficit shrank by more than half during the four years following the tax cuts and before the 2007 real estate crash.
While much of this now feels like distant history, the ongoing wars and the Federal Reserve’s drastic response to the 2008 financial crisis—keeping interest rates near zero for eight years, essentially through the entire Obama administration—contributed to massive deficits that have persisted through to today, especially in the five years following the COVID-19 pandemic.
Since 2001, U.S. federal deficits have averaged about $1 billion annually, but that figure has surged to over $2 trillion per year since 2020, according to the U.S. Treasury.
Today, the total federal deficit stands at $38 trillion, which amounts to roughly $110,000 owed per American—far from the anticipated surpluses once projected.
Following a Challenging 2000–2009, Markets Surged in the First Quarter
What about the markets? After nearly a “lost decade” lasting nine years from March 2000 to March 2009, all major market indexes have experienced remarkable growth—particularly gold relative to the U.S. dollar.
By March 9, 2009, three of the four major indexes—the S&P 500, NASDAQ, and Russell 2000—had fallen by 50% since the decade began (while the Dow was down 40%), but they bounced back strongly from 2009 through 2025:
Over the same 25-year period, the Consumer Price Index (CPI) increased by 83%, which means the real market gains were somewhat diminished.
The U.S. dollar performed even worse, losing about 10% in value overall (and 8% against the euro), while gold and silver surged more than 15 times in value:
The first-quarter returns were decent, but the strong performance of gold and silver signals that the dollar—and the CBO’s deficit forecasts—cannot be relied on in the long run. In fact, President Trump has set a goal for 2026 to deliberately weaken the dollar against the Chinese yuan to “help” exporters boost overseas sales. Much of the talk about the dominance of the “King Dollar” is just rhetoric. In reality, many politicians aim to devalue their currencies to encourage trade, turning paper money into a “race to the bottom,” while gold quietly holds its value, watching from the sidelines.
This brings us to the 2025 summary—a major victory for precious metals as the dollar dropped by 10%.
2025 Brought Massive Gains for Precious Metals
The year 2025 exemplified the key trends seen over the past 25 years—while the stock market continued to climb, gold and silver surged even faster. Although inflation is easing, gold today serves less as an inflation hedge and more as a safeguard against crises, a hedge against the dollar, and increasingly, a hedge against cryptocurrency volatility.
In 2025, the U.S. Dollar Index (DXY) dropped by 10%, allowing major global currencies to gain between 5% and 15%. Meanwhile, the poorest-performing investments of 2025 brought good news for consumers through lower food and energy prices:
So, if 2026 mirrors the gains of 2025, it will surely be a rewarding year for most investors.
Gold has recovered most of the losses it experienced during a steep decline in late October, climbing back to record levels by the end of December.
The precious metal hit a new all-time peak on December 29, marking its best year since 1979 with a 64% rise in 2025 and an increase of nearly 140% since early 2023.
“Gold hit new record highs in late December, fueled by demand for tangible assets amid a weak US dollar, geopolitical tensions, uncertainty among institutions, and low seasonal liquidity,” UBS strategists led by Giovanni Staunovo stated in a report.
Despite the magnitude of the recent rally, UBS maintains that the fundamental conditions continue to support further gains in gold for 2026. The strategists highlight a significant drop in U.S. real interest rates, which they describe as “the opportunity cost of holding non-yielding assets like gold,” currently at its lowest point since mid-2023.
Additionally, demand from both investors and central banks remains close to record levels, while ongoing concerns about rising government debt in advanced economies continue to boost gold’s appeal as a store of value. These factors collectively support expectations for new record highs next year.
“Our outlook for gold remains positive,” the strategists stated, having recently increased their gold price target for March 2026 to $5,000 per ounce.
“We believe gold’s function as a diversifier and hedge remains strong. For investors who favor this asset class, we recommend a mid-single-digit allocation to gold within a diversified portfolio,” they added.
Recent geopolitical developments have strengthened gold’s reputation as a safe-haven asset. UBS pointed out the unexpected U.S. military capture of Venezuelan President Nicolas Maduro last weekend, which caused widespread market reactions.
The bank also notes that ongoing structural demand trends continue to support gold. UBS strategists anticipate central bank gold purchases will total between 900 and 950 metric tons in 2025, just shy of the previous year’s record.
They project total global gold demand to reach approximately 4,850 metric tons, which would be the highest since 2011.
In addition, UBS highlights the sharp increase in government debt among advanced economies, expected to hit around 110% of GDP this year—up from about 75% twenty years ago—and forecasted to rise to about 118% by the decade’s end, according to the International Monetary Fund.
Separately, HSBC commodity strategists predict gold prices could reach $5,000 as early as the first half of 2026.
“We expect prices to trade at or near $5,000 per ounce in the first half of 2026. However, it is possible that the rally may lose momentum as the year progresses,” strategist James Steel wrote in a note.
TASIILAQ, GREENLAND — For decades, oil executives have eyed the Arctic as a potential source for vast petroleum reserves. U.S. government studies estimate that the region north of the Arctic Circle may contain up to 90 billion barrels of oil and nearly 1,700 trillion cubic feet of natural gas.
The amount of oil alone could meet global demand for almost three years if all other drilling activities worldwide stopped immediately.
At the heart of these ambitions lies Greenland, where some of the planet’s most extreme conditions safeguard vast reserves that have attracted prospectors hoping to find another giant oil field like Alaska’s Prudhoe Bay.
One company, March GL—set to be renamed Greenland Energy Company upon going public this year—is aiming to become a major player in the industry by tapping into billions of barrels of oil located on Jameson Land, a peninsula on Greenland’s eastern coast. This oil has the potential to significantly impact U.S. and European markets by introducing a large new supply, which could help reduce Europe’s reliance on Russian oil, currently constrained by strict sanctions due to the ongoing war in Ukraine.
In late October, Yahoo Finance joined March GL CEO and experienced oilman Robert Price, along with the company’s lead petroleum engineer, in the town of Tasiilaq on Greenland’s eastern coast. There, March GL’s contractors were preparing to store a range of heavy machinery for the winter season.
Price had planned to transport the earthmoving equipment by barge to Jameson Land, where the company intends to build a three-mile road from the coast to its inland drilling site for the initial wells. However, rough seas along the island’s eastern coast prevented the tugboat assigned to move the equipment from making the trip. By late autumn, the ice-free window for such a journey was closing too fast to wait for a replacement vessel.
As a result, March GL’s team will keep much of the machinery in Tasiilaq until spring or summer, when thawing ice will allow movement. This delay underscores the challenging and unpredictable operating conditions in Greenland.
Since that trip, the challenges around Price’s ambitions in Greenland have only grown more complex.
After Venezuelan leader Nicolás Maduro was captured and removed from power in early January, President Trump intensified his focus on Greenland. At a Jan. 4 press briefing, Trump said the United States “needs Greenland” to secure its national security interests in the Arctic, drawing strong criticism from both the Greenlandic and Danish governments.
At a White House meeting with more than a dozen major oil executives, Trump insisted that owning Greenland would be essential for defense, saying that defending leased territory is not the same as defending territory the U.S. owns. He added that the U.S. would take action on Greenland “whether they like it or not.”
In a Jan. 6 briefing to Congress, Secretary of State Marco Rubio confirmed that the U.S. was actively pursuing the option of purchasing Greenland from Denmark, and Louisiana Governor Jeff Landry—who Trump named as a special envoy to Greenland—said he intends to work toward making the territory part of the United States.
These moves have heightened diplomatic tensions, with Greenland’s leaders and Denmark pushing back against U.S. efforts and stressing that the island’s future should be decided by its people and legal processes.
Meanwhile, China and Russia have been expanding their military and maritime activities across the Arctic, putting pressure on the U.S. and Europe to boost their own defense readiness and elevating Greenland’s strategic importance. In January, a subsidiary of Russia’s state nuclear corporation shared a video on Telegram showing an icebreaker navigating the “Northern Sea Route,” which passes near Greenland and offers a significantly faster shipping route between Europe and Asia compared to the Suez Canal.
If March GL succeeds, Price’s company could establish a significant American energy foothold in the High North at a time when territorial control has become a top priority for the White House. That, however, was not originally part of Price’s plan.
Oil companies seeking to take part in newly approved exports of Venezuelan crude to the United States after the removal of President Nicolás Maduro are holding urgent talks to secure tankers and organize operations to safely transfer oil from ships and deteriorating Venezuelan ports, according to four sources familiar with the matter.
Trading firms and energy companies such as Chevron, Vitol, and Trafigura are vying for U.S. government contracts to export Venezuelan crude, the sources said, after President Donald Trump announced that Venezuela could deliver up to 50 million barrels of previously sanctioned oil to the United States.
Trafigura told the White House in a meeting on Friday that its first vessel is expected to load within the coming week.
After months under a U.S. blockade, Venezuela has been storing crude aboard tankers and has nearly exhausted its onshore storage capacity. Many of these vessels are aging, poorly maintained, and subject to sanctions. Due to insurance and liability restrictions, other ships cannot directly interact with sanctioned tankers—even if U.S. licenses are granted—sources added.
Onshore storage facilities have also suffered years of neglect, creating additional risks for companies attempting to load the oil.
Shipping firms including Maersk Tankers and American Eagle Tankers are among those seeking to expand ship-to-ship transfer operations in Venezuela, according to three of the sources.
According to one source, Maersk Tankers could reuse the ship-to-shore-to-ship logistics model it previously employed in Venezuela’s Amuay Bay. The company already operates in nearby Aruba and Curaçao, whose waters are frequently used for transferring Venezuelan oil. However, while such transfers are feasible in Aruba and at U.S. ports, they come at a higher cost.
In a statement, Maersk said its presence in Venezuela remains limited, with only 17 employees in the country. The company confirmed that all staff are safe and accounted for, and that there have been no changes to its ocean services. Operations are continuing with only minor delays, and the situation is being closely monitored.
Another shipping source noted that transfer operations will be further complicated by a shortage of smaller vessels needed to move oil from storage tankers to piers, where it can then be transferred to other ships, as well as by poorly maintained machinery and equipment.
American Eagle Tankers (AET), which already facilitates Chevron’s shipments of Venezuelan crude to the United States, is being contacted by potential customers seeking to expand its capacity in the region, two sources said.
Neither AET nor Chevron immediately responded to requests for comment.
Sources added that while exports could potentially return to the roughly 500,000 barrels per day that Venezuela shipped to the United States before sanctions—allowing stockpiles to be drawn down within 90 to 120 days—reaching that level will be difficult if crude must be sourced from both offshore tankers and onshore storage facilities.
Companies are also fiercely competing for loading slots at Venezuela’s main Jose oil terminal, where both capacity and operating speed are constrained. Chevron, a major joint-venture partner in the country, is working aggressively to maintain its preferential access to Venezuelan terminals while preparing its vessel fleet, according to one source.
Meanwhile, oil firms including Chevron, Vitol, and Trafigura are already securing supplies of much-needed naphtha, a Venezuelan industry source said. Naphtha is commonly blended with heavy Venezuelan crude to reduce its density, making it easier to transport and refine.
U.S. Treasury Secretary Scott Bessent announced that Australia and several other countries would participate in a meeting of finance ministers from the Group of Seven (G7) advanced economies, which he is hosting in Washington on Monday to address critical minerals.
Bessent mentioned that he has been advocating for this dedicated meeting on critical minerals since the G7 leaders’ summit last summer, and the finance ministers previously held a virtual session on the topic in December.
India was also invited to attend the meeting, Bessent told Reuters during a visit to Winnebago Industries’ engineering lab near Minneapolis, though he was uncertain if India had accepted the invitation.
It is not yet clear which other countries have been invited.
The G7 consists of the United States, Britain, Japan, France, Germany, Italy, Canada, and the European Union. Many members heavily rely on China for rare earth minerals. In June, the group agreed on a plan to secure supply chains and strengthen their economies.
In October, Australia signed an agreement with the U.S. to challenge China’s dominance in critical minerals, involving an $8.5 billion project pipeline and Australia’s proposed strategic reserve. This reserve will provide essential metals such as rare earths and lithium, which are vulnerable to supply disruptions.
Following this, Canberra reported interest from Europe, Japan, South Korea, and Singapore.
China currently dominates the critical minerals supply chain, refining between 47% and 87% of copper, lithium, cobalt, graphite, and rare earths, according to the International Energy Agency. These minerals are essential for defense technology, semiconductors, renewable energy components, batteries, and refining operations.
In recent years, Western countries have aimed to lessen their reliance on China’s critical minerals due to China’s implementation of stringent export restrictions on rare earth elements.
Monday’s meeting follows reports that China recently started limiting rare earth exports and powerful magnets to Japanese companies, and also banned the export of dual-use goods to the Japanese military.
Bessent noted that China continues to honor its commitments to buy U.S. soybeans and supply critical minerals to American companies.Monday’s meeting follows reports that China recently started limiting rare earth exports and powerful magnets to Japanese companies, and also banned the export of dual-use goods to the Japanese military.
Bessent noted that China continues to honor its commitments to buy U.S. soybeans and supply critical minerals to American companies.
In our December report, we combined the Elliott Wave (EW) Principle with average midterm election-year seasonality and the Armstrong Pi-cycle turn dates to analyze the S&P 500 (SPX). We concluded that:
“… As long as the index remains above the November 21 low of 6720, it can position itself for a subdividing final 5th wave (gray waves W-i, ii, iii, iv, and v), potentially reaching as high as 7490 around April 18-28, 2026.”
Since then, the SPX has risen nearly 2% and appears to be unfolding as expected. With new price data now available, we have revised our short- to intermediate-term EW count but kept the same ultimate upside target range of approximately 7345-7490. Please refer to Figure 1 below.
Figure 1: Intermediate Elliott Wave analysis for the SPX.
Assuming the price stays above the specified warning levels*, with each additional breach raising the probability of the uptrend ending by 20%, we anticipate the index to ideally reach around 7100 for the blue W-iii wave, then decline to roughly 7015 for the blue W-iv wave, followed by a rally to approximately 7160 ± 40 for the orange W-3 wave, and so on. The current pattern depicts a standard impulse wave; however, the green W-5 wave could potentially form an overlapping ending diagonal, leading to an overlapping rally toward the lower boundary of the target zone (around 7345). At this stage, there is no sign that this scenario will unfold. Nevertheless, it’s important to note that once the green W-5 completes—expected around April 18-28—we anticipate a bear market similar to that of 2022 before a larger, multi-year rally to new all-time highs can commence.
GBP/CAD is trading close to one-month highs as investors react to mixed employment data from Canada. Higher unemployment rates and weaker wage growth have capped gains for the Canadian dollar. Attention now turns to the upcoming UK employment and GDP reports scheduled for next week.
The Canadian Dollar (CAD) remained largely unchanged against the British Pound (GBP) on Friday, with GBP/CAD showing little directional movement as the market reacted modestly to Canada’s latest employment data. At the time of writing, the pair is trading around 1.8636, close to a one-month high.
Statistics Canada reported that employment increased by 8,200 jobs in December, surpassing expectations of a 5,000 job decline but significantly lower than November’s 53,600 gain. Meanwhile, the unemployment rate rose to 6.8% from 6.5%, higher than the anticipated 6.6%.
Wage growth showed signs of slowing, with average hourly wages rising 3.7% year-over-year in December, down from 4.0% previously.
From a monetary policy standpoint, the mixed employment report is unlikely to significantly change short-term expectations for the Bank of Canada (BoC). The market largely anticipates that the central bank will keep interest rates steady throughout most of 2026.
While some analysts had speculated about a possible rate hike later in the year, the recent labor data—characterized by rising unemployment and slower wage growth—weighs against that possibility and supports a cautious, wait-and-see approach.
At its December meeting, the BoC held its policy rate at 2.25%, describing it as “about the right level.” Market participants are now focused on upcoming Canadian inflation figures expected later this month, which could influence near-term monetary policy forecasts.
In the UK, attention is shifting to key economic releases next week, including labor market data on Tuesday and the November GDP report on Thursday.
On a broader scale, the interest rate gap between the BoC and the Bank of England (BoE) continues to favor the British Pound, maintaining upward momentum for GBP/CAD.
Additionally, the Canadian Dollar remains sensitive to developments in the oil market. Increased U.S. regulation of Venezuelan oil supplies has raised expectations of greater global output, heightening concerns over oversupply that could pressure oil prices and weigh on the Loonie, given Canada’s role as a major energy exporter.
U.S. employment figures reinforce the Federal Reserve’s cautious stance on monetary policy. Meanwhile, Europe’s economic growth remains sluggish, but policymakers appear comfortable with the current pace. As demand for the U.S. Dollar stays strong, the EUR/USD pair has potential to continue its downward move toward the 1.1470 level.
The EUR/USD pair opened the year on a weak note, declining for the second week in a row to hover near 1.1640, marking its lowest level in a month. The US Dollar gained strength across the foreign exchange market, supported by geopolitical tensions and robust US employment figures.
Geopolitical Unrest Drives Financial Markets Early in 2026
On Saturday morning, the world learned that U.S. President Donald Trump had executed a precise military operation in Venezuela, capturing then-President Nicolás Maduro and his wife, Cilia Flores, and transporting them to the United States to face charges related to narco-terrorism. Delcy Rodriguez, Maduro’s Vice-President, has now taken control of Venezuela. Although there was initial criticism of Trump’s actions, Rodriguez quickly shifted her stance and expressed willingness to cooperate with the U.S.
President Donald Trump did not hide his motives for the U.S. military action in Venezuela. At a press conference following the operation that removed Nicolás Maduro from power, Trump said the United States would exercise control over Venezuela and its oil resources and warned of further measures if the Venezuelan government resisted. He described a future “transition” for the country’s governance, but did not outline specific plans for democracy or civilian rule.
In the days after the raid, international tensions gradually eased, but the situation remained unresolved. One clear strategic factor behind the U.S. intervention was limiting Venezuela’s oil ties with major global powers, including Russia and China — a goal linked to broader geopolitical rivalry.
Meanwhile, Russia carried out a significant missile strike on Ukraine early on Friday, shortly after Ukraine and its European partners agreed on elements of postwar security guarantees. The attack was widely interpreted as Russian President Vladimir Putin challenging Western support for Kyiv and signaling that sanctions, including restrictions on Russian oil, would not deter Moscow’s military actions.
In addition, Trump reignited controversy with comments about Greenland, an autonomous territory of Denmark. He argued that the U.S. needs Greenland for national security reasons and suggested Washington might pursue control of the island — a stance that drew criticism from European leaders and sparked fears of future U.S. territorial ambitions.
Europe Maintains Ongoing Stability
News from Europe has had little impact on the Euro (EUR), which is understandable given the Eurozone’s fragile yet steady stability, with ongoing growth, manageable inflation, and no significant employment concerns.
Eurostat reported that the seasonally adjusted unemployment rate in the Euro area stood at 6.3% in November, slightly down from 6.4% in October 2025 but up from 6.2% in November 2024. The broader EU unemployment rate remained stable at 6.0% in November 2025 compared to October, though it rose from 5.8% a year earlier.
The Hamburg Commercial Bank (HCOB) released the final December figures for the Eurozone’s Services and Composite Purchasing Managers’ Indexes (PMIs). The data showed a twelfth consecutive monthly increase in private sector activity, with the Composite PMI at 51.5, down from 52.8 in November. Services output also declined to 52.4 from 53.6, marking three-month lows for both indicators.
Regarding inflation, Germany’s preliminary December Harmonized Index of Consumer Prices (HICP) increased 2% year-over-year, lower than November’s 2.6% and below the 2.2% forecast. Monthly inflation rose by 0.2%, half the expected 0.4%. The Eurozone’s overall HICP inflation matched expectations at 2% annually, with a 0.2% monthly rise following November’s 0.2% decline.
Germany reported mixed figures for November, with retail sales falling 0.6% while industrial production saw a modest 0.8% increase.
On monetary policy, European Central Bank (ECB) Vice President Luis de Guindos told Bloomberg that current interest rates are appropriate as inflation targets have been met, though uncertainty remains high. This aligns with the ECB’s current stance: pausing rate changes while maintaining vigilance.
U.S. Employment and Economic Growth Update
The U.S. macroeconomic calendar was busy with key data mostly signaling progress. The Institute for Supply Management (ISM) reported December Manufacturing PMIs, showing a contraction in manufacturing output as the index fell to 47.9 from 48.2 in November, below expectations of 48.3. However, the Employment Index improved slightly to 44.9 from 44, while the Prices Paid Index remained steady at 58.5. Meanwhile, the Services PMI rose to 54.4 from 52.6, with the employment sub-index increasing to 52 from 48.9 and the Prices Paid Index easing to 64.3 from 65.4.
The trade deficit narrowed sharply to $59.1 billion in October, down from $78.3 billion, reflecting the impact of Trump’s policies.
Employment data was mostly positive. The ADP report showed private sector job growth of 41,000 in December, a bit below the expected 47,000 but an improvement over November’s revised -29,000. The JOLTS report recorded 7.146 million job openings at November’s end, down from 7.449 million in October. Job cuts announced in December dropped 50% from November to 35,553, the lowest monthly total since July 2024.
The December Nonfarm Payrolls (NFP) report showed 50,000 new jobs added, below the 60,000 forecast, while the unemployment rate fell to 4.4%, better than the anticipated 4.5%. November’s payrolls were revised down to 56,000 from 64,000. This data put some short-term pressure on the USD but did not alter the Federal Reserve’s cautious monetary policy.
The Fed cut interest rates by 25 basis points in December as expected, signaling the possibility of one more cut in 2026—less than markets hope but consistent with a cautious stance focused on employment. Market watchers anticipate at least two rate cuts this year, especially with Chairman Jerome Powell’s term ending in May and a likely replacement aligned with Trump’s preference for more aggressive easing. Still, no immediate Fed action is expected in the first meeting of 2026.
What’s coming up next on the agenda?
In the days ahead, attention will turn to U.S. inflation data, with the December Consumer Price Index (CPI) scheduled for release on Tuesday, followed by the Producer Price Index (PPI) for October and November on Wednesday. November Retail Sales data will also be published on Wednesday. These reports are expected to influence the Federal Reserve’s future policy decisions and, consequently, the direction of the U.S. Dollar.
EUR/USD technical analysis
From a technical standpoint, the daily chart shows a bearish outlook for EUR/USD with potential for further decline. The 20-day Simple Moving Average (SMA) is trending downward but still sits above the 100- and 200-day SMAs, indicating weakening short-term momentum. The price remains below the 20-day and 100-day SMAs at 1.1733 and 1.1666 respectively, while the rising 200-day SMA at 1.1571 acts as support. The Momentum indicator has dropped below its midpoint, maintaining strong bearish momentum, and the Relative Strength Index (RSI) is falling toward 36, suggesting lower prices ahead. A close above the 100-day SMA at 1.1666 could relieve some selling pressure and target the 20-day SMA at 1.1733, but failure to break this resistance leaves the pair vulnerable to test the 200-day SMA support at 1.1571.
On a broader scale, the weekly chart also points to continued bearishness. The pair trades beneath the flattened 20-week SMA near 1.1665, with upside limited by this level. The 100- and 200-week SMAs are rising at 1.1085 and 1.0856 but remain far below the current price, so they are less relevant short term. The Momentum indicator on the weekly chart has turned downward but stays within neutral territory, while the RSI is declining around 52.
If the pair falls below the key 1.1600 level, the next significant support lies near 1.1470, a major long-term pivot. Overall, bears will maintain control as long as EUR/USD stays below the 1.1740-1.1750 resistance zone.
Zenas BioPharma, Inc. (NASDAQ: ZBIO) disclosed in a Form 4 filing that Chief Executive Officer Leon O. Moulder Jr. acquired 100,000 shares of the company’s common stock across three transactions between January 7 and January 9, 2026. The total value of the purchases was approximately $1.639 million, with share prices ranging from $16.30 to $16.55.
Moulder bought 50,000 shares on January 7 at a weighted average price of $16.38, through multiple trades executed between $16.21 and $16.53. On January 8, he added 30,000 shares at an average price of $16.30, with individual transactions ranging from $15.82 to $16.60. The final purchase occurred on January 9, when he acquired 20,000 shares at a weighted average of $16.55, with prices between $16.05 and $16.87.
After these transactions, Moulder directly holds 366,155 shares of ZBIO stock. He also has voting and investment authority over an additional 36,928 shares held in a trust and 1,672,039 shares held indirectly through Tellus BioVentures LLC.
Separately, Zenas BioPharma recently announced favorable results from its Phase 3 INDIGO study of obexelimab for Immunoglobulin G4-Related Disease (IgG4-RD). The trial showed a 56% decrease in flare risk versus placebo and met all primary and secondary endpoints with statistical significance. However, Morgan Stanley downgraded the stock from Overweight to Equalweight and reduced its price target from $37 to $19, noting that the reported hazard ratio of 0.44 did not fully meet investor expectations.
In contrast, H.C. Wainwright reiterated its Buy rating and set a $44.00 price target, highlighting the trial’s clinically meaningful outcomes. Jefferies likewise maintained a Buy recommendation but lowered its target from $62.00 to $48.00, citing a higher-than-expected proportion of recurrent patients in the study. Analyst responses have been mixed, underscoring differing views on the trial’s implications. The study enrolled 194 participants and delivered notable reductions in investigator-reported flares as well as in the need for rescue therapy.
THE ETERNAL SOVEREIGN 