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Markets

Chances had already become quite slim and Friday’s US eco data rubberstamped markets’ feeling that the Fed has good reason to wait for clearer directional evidence that the economy is weakening and/or is inflation is moving decisively closer to target before further easing policy. Indeed, US December payrolls with monthly job growth at 50k (vs 70k expected) was no ‘grand cru’. However, with the unemployment rate easing from 4.5% to 4.4%, it only confirms the ‘low-hiring, low firing’ pattern that already reigns on the US labour market for quite some time. Average hourly earnings at 0.3% M/M and 3.8% Y/Y even were marginally higher than expected. Later in the session, consumer confidence of the University of Michigan also printed slightly stronger than expected (54 vs 52.9) with inflation expectations indicators (4.2% at 1-y and 3.4% for the 5 & 10-y sector) still printing uncomfortably high. Markets now have fully prices out an end January Fed rate cut. A next fine-tuning move now is only fully discounted for the June meeting. The US yield curve logically flattened with the 2-y adding 4.4 bps as the 30-y yield ceded 2.5 bps. German yields only changed 1 bps (at best). Markets on Friday also looked out at the opinion/ruling of the of the Supreme Court on the IEEPA US trade tariffs, but the judgment was delayed, maybe until this week. Equity markets at least could live with the Fed likely taking a balanced approach on further easing. US indices added between 0.48% (Dow) and 0.81 % (Nasdaq). The Eurostoxx 50 even remain on record path (+1.58%). The dollar retained its advantage over other majors. DXY closed a solid start to the new year at 99.13. EUR/USD dropped to close to week at 1.1637 (to be compared with a 1.1746 open on Jan 2).

The week after the payrolls usually brings some data poverty. US CPI data tomorrow and retail sales (Wed.) still are worth looking at but likely won’t change markets assessment on Fed policy. However, the lack of data drivers might be compensated for by multiple event risks that resurfaced or intensified during the weekend. Overnight, Fed Chair Powell said that the US central bank was served with grand jury subpoenas, related to Powell’s testimony and the renovations of the Fed headquarters. However, the Fed Chair clearly indicated that the move ‘should be seen in the broader context of the administration’s threats and ongoing pressure’. The Fed Chair’s forceful reaction marks a clear escalation in the fight on central bank independency. In a first reaction US risk premia understandably are rising. The 30-y US Treasury yield adds 3.5 bps. US equity futures are ceding 0.5%+. The dollar is falling prey to a reversal after recent gains. EUR/USD rebounds to the 1.167 area. Also keep an eye at other (geo)political event risk including to the US reaction on the tensions in Iran and the still pending ruling of the US Supreme Court on tariffs. Especially the fight on Fed independence will be highly debated on the financial newswires. In a first reaction it might put some further pressure on US assets, including the dollar. Still we are cautions to already draw firm, directional conclusions based on current ‘headlines’. The auction of US 3-y and 10-y paper this evening in this respect might be a good pointer of appetite for US assets as the Fed independency debate lingers.

News & Views

Rumours are swirling in Japan that PM Takaichi will call for snap elections. The co-leader of junior coalition party Ishin yesterday hinted at that when saying he felt “we have shifted to a new stage now” after talking with Takaichi. The biggest opposition party after the Sunday quote said they are now in election mode. Takaichi’s LDP under her predecessor Ishiba lost its majority in both houses of parliament. It now has a razor-thin one in the powerful lower house thanks to Ishin and the support of three independent lawmakers. Takaichi is polling high and is rumoured to announce the dissolution of the lower house as soon as January 23. Japanese markets are closed today in observance of Coming-of-age Day but it is expected that snap elections may lift (longer-term) bond yields through rising fiscal risk premia.

US President Trump is demanding credit-card companies to cap interest rates at 10%, drastically down of the 20%+ in recent years. Lenders argue that such rates are to compensate for the lack of collateral when borrowers default and warn the rates cap could result in reduced credit availability. Trump has set January 20 as a deadline for companies to comply, adding that they would be “in violation of the law” if they didn’t. POTUS’ move follows instructions last week for government-sponsored enterprises Fannie Mae and Freddie Mac to purchase $200bn in mortgage bonds, aimed at driving down mortgage rates.

Gold surged to a fresh record high, with Silver following close behind, as markets reassessed political risk around US monetary policy. The 4,685 projection firmly within reach for Gold, and break of which would pave the way to 5,000 psychological level and above.

Additionally, after a year of Silver leadership, momentum may now be shifting back toward Gold, a shift consistent with rising concern over institutional credibility rather than cyclical reflation.

The immediate catalyst came US prosecutors launched on Friday a criminal investigation into Fed Chair Jay Powell. The development jolted markets, reviving concerns that the central bank could face increasing political interference at a time when policy credibility remains critical.

The episode is widely seen as the latest salvo from the Donald Trump administration against the Fed. The central bank has been under sustained pressure to ease policy faster, even as policymakers remain wary of reigniting price pressures or undermining hard-won inflation progress.

Powell, in a statement released Sunday, confirmed that the Fed had received grand jury subpoenas and a threat of criminal indictment from the Justice Department. The matter relates to his testimony before Congress concerning a USD 2.5B renovation of the Fed’s headquarters, though Powell framed the move in a much broader political context.

He warned that the action should be seen against a backdrop of ongoing threats and pressure aimed at forcing lower interest rates and securing greater political control over monetary policy. He said bluntly, "this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure".

Full statement of Fed.

Technically, Gold's up trend resumed and it's now on track to 61.8% projection of 3,267.90 to 4,381.22 from 3,997.73 at 4,685.76. Decisive break there will pave the way to 5,000 psychological level, and possible further to 100% projection at 5,111.05. Outlook will stay bullish as long as 4,381.22 resistance turned support holds, in case of retreat.

Silver is also trying to resume its long term up trend. Sustained trading above 83.94 resistance will pave the way to 261.8% projection of 36.93 to 54.44 from 48.50 at 94.34. Nevertheless, break of 73.80 will bring another pullback first.

The year continues at full speed, with data, political, and geopolitical headlines — all very interesting and worrying.

Last week, we were talking about oil — in the context of the U.S.’s capture of Maduro in an overseas operation that raised questions about international law and sovereignty. Oil and oil stocks fluctuated throughout the week as the U.S. said it wants to rebuild the country’s aging infrastructure to pump that oil and sell it. Exxon Mobil said last Friday that Venezuela was investable, and Trump quickly responded that they would keep Exxon out of Venezuela because he didn’t like their response. So, as everywhere, U.S. government intervention will heavily influence winners and losers. If you want to understand why stocks move the way they do, Trump’s Social Truth feed might give you a better explanation than traditional data and earnings.

SPDR’s energy ETF hit a record high last week, retreated, and closed the week on a positive note. Crude oil tested the 50-day moving average (DMA) and opened the week above it, but bullish bets remain very timid. Net bullish positions are around 15-year lows. That’s because oil supply is ample thanks to record U.S. pumping and OPEC’s restoration strategy. It’s hard to see oil bulls clearing key resistance levels: $62.50 per barrel (200-DMA) and $64 per barrel (38.2% Fib retracement of the June–December rally). Price rallies are being seen as opportunities to strengthen short positions, targeting the $53–55pb range.

This week, Jerome Powell is on the front page of Bloomberg news as the DOJ has targeted him and the Fed over his congressional testimony on ongoing renovations of the Federal Reserve’s (Fed) headquarters. That came on Friday. Powell hit back, saying this has little to do with the renovations, and more to do with Trump being unhappy with the Fed’s rate-setting policies — specifically, that they are not cutting rates as aggressively as he would like. Powell highlighted that the key issue is whether the Fed can continue setting interest rates based on economic data and evidence, or whether monetary policy will be directed by political pressure.

I’m afraid we may be moving toward the second scenario. If the Fed becomes a political tool, with its chair replaced by a government puppet, that could further weaken appetite for the U.S. dollar and U.S. bonds.

For those still following traditional economic news, last Friday’s U.S. jobs data was mixed. The economy added 50’000 jobs in December — fewer than analysts expected — but the unemployment rate fell and average earnings growth accelerated. Overall, the jobs market is weakening moderately, and with inflation risks looming, the Fed may wait before cutting rates. The U.S. 2-year yield jumped to 3.54%, and the probability of a March rate cut fell to 30% from around 50% a week ago. Equity markets reacted positively: the small-cap index added 0.78%, and the Nasdaq 100 gained more than 1%.

Part of the support comes from the Fed injecting liquidity through its RMPs, and the U.S. government now suggesting to buy $200 billion in mortgage bonds to reduce housing costs. It’s not officially QE, but the mechanics resemble the Fed’s bond and MBS purchases under QE, which injected tens of billions into the system through government and MBS purchases. Regardless of who injects cash — the Fed or the government — the outcome is ample liquidity, which markets are loving. So there’s no reason to exit equities. In theory, these measures could further boost inflation pressures, and equities could help investors manage that risk.

Speaking of inflation, the U.S. inflation data will be a major highlight this week. The previous CPI report was questionable, with housing inflation held at 0% due to missing data, resulting in unusually low numbers. This week, fresh data is expected, with the headline figure seen stable near 2.7%. Higher-than-expected numbers would likely temper Fed rate-cut expectations, and analysts will scrutinize the methodology to see if it reflects reality.

Again, if the Fed can’t set policy based on economic data and inflation picks up, you want assets that temper inflation risks: gold, commodities, inflation-linked bonds, dividend-paying stocks, and tech.

Asian tech kicked off the year outperforming U.S. peers. TSMC revenues topped estimates last week, and the company will release earnings this week, highlighting continued AI-related revenue growth. The valuation gap between U.S. and Asian tech suggests further inflows toward the latter, which are supported by earnings growth expectations: EPS is expected to grow 79% in South Korea, 36% in Taiwan, and 28% for the Nasdaq, according to Bloomberg. The Korean Kospi started the new week at a fresh record high, while the Chinese Hang Seng is up 1.2% at the time of writing.

In focus today

In the euro area, the Sentix indicator is released today, providing the first estimate of investor confidence in 2026. While confidence improved in 2025 compared to 2024, it ended the year on a downward trajectory.

In Denmark, December inflation data is released. We expect a decline to 1.9% from 2.1% in November, driven by falling fuel prices. It will also be interesting to see if December's butter sales confirm the recent trend of lower food prices.

The week's economic calendar is light, with key US data releases including CPI on Tuesday, followed by PPI and retail sales on Wednesday. Also on Wednesday, the Supreme Court is expected to issue its next ruling on President Trump's use of emergency tariff powers under IEEPA. On Thursday, Germany's statistics agency will publish a full-year 2025 GDP estimate, offering insight into Q4 growth, while the UK's November GDP data is released.

The year 2026 has begun with significant developments, particularly in geopolitics rather than economics. In our latest report, Geopolitical Radar: What's next after US assault on Venezuela?, 9 January, we explore these dynamics further. We kindly invite you to share your insights by participating in our Reader Prediction Survey 2026.

Economic and market news

What happened over the weekend

In the US, Fed Reserve Chair Powell is under investigation regarding his testimony last summer about the central bank's building renovation project. In a video statement released last night, Powell described the investigation as a pretext for Trump's ongoing efforts to pressure the Fed to lower interest rates and undermine its independence.

In geopolitics, Iran warned the US against military intervention amidst widespread protests, following Trump's statement that Washington is 'ready to help'. As noted in our Geopolitical Radar, the US may target Iran's regime next. While June's bombing of nuclear facilities caused only a temporary setback, the US's access to Venezuelan oil may reduce concerns about Iranian retaliation. The ongoing protests in Iran could provide a pretext for US-Israeli intervention. According to US officials, Trump is set to be briefed on Tuesday regarding potential responses to the protests in Iran.

What happened Friday

In the US, the December jobs report came in close to expectations, with nonfarm payrolls (NFP) increasing by 50k jobs (consensus: 60k). The unemployment rate declined to 4.4% from 4.6%, supported by solid job growth (+232k) in the household survey and a shrinkage in labour supply (-46k), which explains the drop in the unemployment rate. Similar to the ADP survey, job growth was concentrated in a few sectors, particularly services such as leisure, hospitality, education, and healthcare, while the manufacturing sector recorded job losses (-8k).

On Friday, the preliminary January result of the University of Michigan survey showed that consumers' long-term inflation expectations (5-year) edged up slightly to 3.4% from 3.2% in December, while 1-year inflation expectations remained stable at 4.2%. Consumers showed slightly improved optimism, reflected in the recovery of both current conditions and future expectations in the consumer sentiment component. However, uncertainty around IEEPA tariffs persists and may influence sentiment going forward.

In Norway, core inflation rose slightly to 3.1% y/y in December, driven by higher food prices due to fewer pre-Christmas discounts compared to 2024. Imported inflation appears to be rising again, while domestic inflation remains around 4%. Rent inflation eased to 3.6%, despite signs of higher market-based rents. The December print of 3.1% y/y is marginally above Norges Bank's estimate from the December MPR (3.0%), but unlikely to affect expectations of a rate cut in June.

In Sweden, the GDP indicator for November showed robust growth, rising by 0.9% m/m and 2.7% y/y, driven primarily by the service sector. Private sector production (PVI) grew by 0.5% in November, with the service sector up by 0.7%, while the industrial sector declined by 0.1%. These results align with our forecast and further confirm the ongoing Swedish recovery, though volatility in the GDP indicator remains a consideration.

In the euro area, retail sales exceeded expectations in November, rising by 0.2% m/m (cons: 0.1% m/m) and 2.3% y/y, significantly above forecasted 1.6% y/y due to a major upward revision of October's figures. This is an encouraging sign, indicating that businesses and consumers are adapting well to external shocks such as tariffs.

Equities: Global equities had a strong day on Friday with the cyclicals outperforming the defensives. Tech was once again not in the top performers, extending the pattern we have observed since the start of the year. S&P500 rose 0.6%, Nasdaq +0.8%, Russell2000 +0.8% and Stoxx600 rising 1%. Materials was clearly the outperformer on Friday rising 1.8%. Year to date, Russell2000 has been off to a strong start rising almost 5%, well above the 1.5% rise in S&P500. Asian markets are in green this morning.

FI and FX: Over the weekend, the Federal Reserve was served with subpoenas from the Justice Department threatening a criminal indictment, related to Chairman Powell's testimony in Congress regarding the Fed headquarters' renovations. Chairman Powell has pushed back on this in a video and statement, saying that it is a consequence of the Fed setting monetary policy that will best suit the public, rather than the preferences of the US President. The dollar weakened on the news, with EUR/USD moving from a low of 1.1622 to 1.1663. Gold prices are about 1.5% higher and US equity futures are trading lower (S&P -0.6%). There has been no UST cash trading overnight as Japan has been closed.

We've only bedded down one full week of trading in the new year, but it feels like we've had to process a year's worth of consequential news already; most obviously the toppling of Venezuelan President Maduro, unrest in Iran and threats to Greenland's territorial integrity. There's been no let-up today, with Fed Chair Powell announcing that the Fed has been served a grand jury subpoena threatening criminal indictment. The week ahead should be no less lively when it comes to geopolitics, ongoing threats to Fed independence and the data flow. The week ahead is headlined by US Dec CPI and locally, the first read on consumer sentiment in the new year.

Australian dollar takes a breather after a solid start to 2026

We've only bedded down one full week of trading in the new year, but it feels like we've had to process a year's worth of consequential news already; most obviously the toppling of Venezuelan President Maduro, unrest in Iran and threats to Greenland's territorial integrity. There's been no let-up today, with Fed Chair Powell announcing that the Fed has been served a grand jury subpoena threatening criminal indictment. Markets are taking these extraordinary developments in stride, for the most part. The week ahead should be no less lively when it comes to geopolitics, ongoing threats to Fed independence and the data flow. The week ahead is headlined by US Dec CPI and locally, the first read on consumer sentiment in the new year.

Australian dollar starts year on front foot

AUD started the year on the front foot with a quick US1 cent sprint to 15-month highs at 0.6767 (7 Jan). AUD/EUR also finally broke out of its long 0.55-0.57 slumber last week, to just shy of 0.58, levels not seen for a good 6 months. AUD/JPY, AUD/CAD and AUD/NZD all broke new ground last week as well.

This was all unfolding Wednesday, but then a non-threatening Nov CPI and a patient sounding RBA Deputy Gov. Hauser threw a spanner in the works.

Nov headline CPI printed weaker than expected at 3.4% YoY (vs exp. 3.6%), however the pace of trimmed mean measure remained steady at 3.2% YoY. The largest contributors included housing, food and non-alcoholic beverages, and transport, but there was encouraging downsides in garments, household services and contents. The Nov CPI outcome has defused some of the upside risk that was building around Q4 trimmed CPI (due 28 Jan).

In an interview with ABC on Thursday, Deputy Gov. Hauser didn't sound any more hawkish than recent RBA communications. If anything, there was an air of patience to his comments and the immediate threat of a Feb rate hike receded a little. He said "we're trying to target inflation in a year or two years' time" and "We don’t have a rule that says if it’s 0.9 we hold, and if it’s 1 we raise and if it’s 0.7 we cut — we take a view of the whole economy".

In the wake of the CPI and Hauser's comments, markets walked back pricing for a Feb hike to about 6bps from around 10bps and for 2026 as a whole, trimmed pricing from 40bps to about 33bps. A correction in AUD/USD ensued and by Friday the pair corrected almost US1 cent from its 0.6767 highs.

Commodities break higher in the new year

During all the consequential geopolitical news in the new year, commodities are on fire. Copper periodically traded higher through 2025 but an impulsive break higher unfolded in December and extended into the new year which saw Copper rally 25% in 5 weeks to $13,387/t on the LME.

Precious metals continue to break unchartered levels. Silver outdid copper with a 63% gain since the start of December. Gold continues to forge ahead on geopolitics and threats to Fed independence hitting new lifetime highs today as well just shy of $4600/oz.

Iron ore is getting in on the act as well. Despite very high levels of port inventories in China, Singapore iron ore has firmed in the new year to just shy of $110/t.

These commodity price gains obviously spilled into AUD upside in the new year and continue to provide a supportive backdrop. AUD/USD may be off its highs, but this commodity backdrop continues to help AUD on a range of key crosses.

Questions about the dollar's status at the start of a new week

A sleepy start to this week was given a wake-up call when the Fed issued a press release that they had been served grand jurors subpoenas on Friday. Fed Chair Powell issued a statement and a video and is clearly not taking this lying down. The USD was marked lower across the board on this news. We still await the announcement of the next Fed chair later this month. The arc of this story - Fed independence - still has a very long way to run, and adds to the growing list of long-term question marks about the USD.

There's the scarcely believable rhetoric around annexing Greenland, banning defence companies from doing capital returns and blocking institutional investors from buying homes, not to mention a new (dovish) Fed Chair announcement later this month, the 21 Jan Supreme court hearing into Fed Governor Cook's firing, and at some point the Court's opinion on the legality of IEEPA tariffs. The temporary bill that reopened US Govt expires Jan. 30, setting up another showdown.

Geopolitics front and centre

On Jan 3 the US launched a military strike against Venezuela during which its President, Nicolas Maduro, was captured and brought to the US. Since then, the US government has seized "temporary" control of Venezuela's crude oil reserves with 1.68Mb loaded during the first week of the month and cargoes mainly bound for US refiners.

While oil prices faltered slightly on concerns of a worsening oil supply glut, the outbreak of anti-government protests in Iran have kept oil prices elevated. With several hundred protesters killed, Trump has threatened military action to which Iran responded it would "retaliate if attacked" - crude oil futures have accordingly surged more than 6% since last Thursday to $59.5/bbl.

Trump has also renewed threats to seize control of Greenland, putting the future of NATO in doubt, with several European nations, namely the UK and Germany scrambling to organise greater security and defence for the region. These potentially hugely consequential geopolitical shifts have not really had an impact on FX markets, yet. But they nevertheless play to the ongoing brand damage to the US' stature on the global stage as the guardian of the western alliance.

On the data front, the US Dec jobs report was read by the market as mixed. Dec payrolls grew by a mediocre 50k and the previous 2 months were revised down by an eye-catching 76k. But the unemployment rate unexpectedly slipped 0.1ppts to 4.4%. Other data in the week was pretty mixed for the US. Nov JOLTS job openings fell to their lowest level since Sep 2024, whilst Dec services ISM index showed a punchy rebound, to its highest levels since Oct 2024.

Global equities posted modest gains over the week, with the S&P500 climbing 1.6% despite rising geopolitical tensions between the US and several other nations. US 10-year yields oscillated in a 4.12-4.20% range, finishing the week in the middle of this range.

The week ahead…

Turning to the week ahead, the calendars are headlined by US Dec CPI and PPI, and Nov retail sales. The Fed's Beige Book will also be released. Japanese markets are closed today on account of the Coming-of-age holiday. In Australia, we have consumer sentiment figures for January and Q4 Job Vacancies. Today's Nov ABS household spending data shows recovery momentum continuing to build.

Monday

• Fedspeak; Williams, Barkin, Bostic.
• Japanese markets closed for Coming-of-age holiday.
• G7 finance ministers meet in Washington to discuss rare earths.

Tuesday

• Australia Jan Westpac Consumer Confidence
• US Dec CPI, Federal Budget Bal., Oct New Home Sales
• Fedspeak; Barkin, Musalem.

Wednesday

Australia Nov Job Vacancies

• China Dec Trade Bal.
• US Nov PPI, Retail sales
• Fed Beige Book
• Fedspeak; Miran, Williams, Kashkari, Paulson, Bostic.

Thursday

• Australia Jan Consumer Inflation Expectation
• Japan Dec PPI
• US Jan Empire State Manf.
• Fedspeak; Barkin, Schmid, Barr.

Friday

• US Dec Industrial Production
• Fedspeak; Jefferson, Bowman.

Key Highlights

• EUR/USD failed to extend gains and declined below 1.1700.
• A major bearish trend line is forming with resistance at 1.1705 on the 4-hour chart.
• GBP/USD is showing some bearish signs below 1.3450.
• USD/JPY started another increase and climbed above 157.75.

EUR/USD Technical Analysis

The Euro struggled to stay above 1.1740 and started a fresh decline against the US Dollar. EUR/USD declined below 1.1700 to enter a bearish zone.

Looking at the 4-hour chart, the pair settled below 1.1700, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The pair even tested 1.1620. A low was formed at 1.1618, and the pair is now recovering some losses.

Immediate resistance sits near 1.1665 or the 23.6% Fib retracement level of the downward move from the 1.1807 swing high to the 1.1618 low. The first key hurdle is seen near 1.1690.

There is also a major bearish trend line forming with resistance at 1.1705. A close above 1.1705 could open the doors for a move toward 1.1735 and the 100 simple moving average (red, 4-hour).

Any more gains could set the pace for a steady increase toward 1.1800. If there is no break above 1.1705, there could be a bearish reaction. On the downside, immediate support is near the 1.1635 level.

The first major area for the bulls might be near 1.1620. A close below 1.1620 might spark heavy bearish moves. The next support could be 1.1550, below which the bears might aim for a move toward 1.1520.

Looking at GBP/USD, the bears remain in action, and they could soon aim for a sustained move below 1.3400.

Upcoming Key Economic Events:

• Euro Zone Sentix Investor Confidence for Jan 2025 - Forecast -6.1, versus -6.2 previous.

The focus of the week was U.S. employment data, which came in slightly weaker than expected. Nonfarm payrolls increased by around 50,000 jobs, while October and November figures were revised lower. However, markets paid more attention to the lower-than-expected unemployment rate, which supported the U.S. dollar and helped U.S. equity markets reach new record highs. As a result, expectations shifted toward the next U.S. interest rate cut taking place in April.

In Europe, the EU unemployment rate also came in below expectations, pointing to continued strength in the labor market. At the same time, rising geopolitical risks—linked to developments in Venezuela and Greenland—supported safe-haven demand. Gold remained strong throughout the week as investors looked for protection against growing political uncertainty.

In Japan, political developments also drew attention. Following her recent rise in support, Sanae Takaichi is believed to be considering calling a snap election in mid-February, as the market continued to worry about rising 10-year Japanese government bond yields.

Markets This Week

U.S. Stocks

The Dow has started the year on a positive note, extending last year’s momentum. U.S. employment data was viewed as supportive for equities, and the short-term trend is pointing higher. Buying pullbacks appears to be the preferred strategy for now, as long as prices remain above the 10-day moving average. However, unexpected policy actions from Trump remain a key risk that could disrupt the uptrend. Resistance is seen at 49,500 and 50,000, while support is located at 48,750, 48,000, 47,500, and 47,000.

Japanese Stocks

The Nikkei 225 surged after U.S. employment data boosted U.S. equities and the yen weakened further, pushing the index to fresh record highs. Some profit-taking may appear early in the week, but with the trend remaining strong and the yen staying weak, buying pullbacks continues to look like the preferred strategy. Resistance is seen at 54,000円, 55,000円, and 56,000円, while support is located at 52,500円, 51,500円, and 51,000円.

USD/JPY

USD/JPY returned to the key 158 level after U.S. employment data showed the U.S. economy remains strong. The weak-yen trend continues as concerns over Japan’s long-term debt persist. Volatility may increase this week as markets push higher and watch whether the Bank of Japan intervenes at current levels or waits until 160. For short-term traders, buying pullbacks toward the 10-day moving average or a clear break above 158 may offer opportunities. Resistance is seen at 158, 159, and 160, while support is located at 156, 155, and 154.5.

Gold

Gold remained strong throughout the week as rising geopolitical risks encouraged buyers to return to the market. Increased uncertainty linked to Trump’s activity in Venezuela and discussions around Greenland supported safe-haven demand. With prices now trading close to record highs, the uptrend remains intact and buying pullbacks continues to look like the preferred strategy in the current environment. Resistance is seen at $4,550, $4,600, and $4,700, while support is located at $4,450, $4,400, and $4,350.

Crude Oil

WTI crude tested support near $55 before rebounding and finishing the week close to resistance at $60, supported by ongoing unrest and protests in Iran that could threaten supply from key producers. Technical indicators continue to point to sideways movement, making range trading the preferred approach while prices remain between $55 and $60. However, a further rise in Middle East tensions could trigger a break above $60. Resistance is seen at $60, $65, $66.50, $70, and $75, while support remains at $55 and $50.

Bitcoin

Bitcoin had a strong start to the week as traders positioned for 2026, but selling emerged near the $95,000 resistance level, pushing prices back toward the middle of the range. With equities rallying strongly, Bitcoin underperformed, making for a somewhat disappointing week. In the current environment, range trading continues to look like the preferred strategy. Resistance is seen at $95,000 and $100,000, while support is located at $85,000, $80,000, and $75,000.

This Week’s Focus

• Monday: None
• Tuesday: U.S. CPI and New Home Sales
• Wednesday: Australia Building Approvals, U.S. PPI, Retail Sales and Existing Home Sales
• Thursday: Japan PPI, U.K. GDP, Industrial Production and Trade Balance, E.U. Trade Balance, U.S. Philadelphia Fed Manufacturing Index and S&P Global Manufacturing PMI
• Friday: E.U. German CPI, U.S. Industrial Production

It is expected to be a busy week, with the yen and gold near key levels. U.S. inflation and retail sales data may cause market swings, while rising geopolitical tensions are keeping traders active. Markets will also be watching the Bank of Japan closely for any signs of intervention if the yen continues to weaken.

For decades, investors viewed Gold and Silver as the ultimate insurance policy. Traditionally, precious metals and equities moved in opposite directions, providing a natural hedge for portfolios. However, the market dynamics of 2024 and 2025 completely rewrote the rulebook. As we navigate the first quarter of 2026, understanding this new “direct correlation” is vital for protecting your wealth.

The Foundation: Why Metals Traditionally Oppose Stocks

Historically, Gold (1$XAU$) and the S&P 500 (2$SPX$) maintained a strong inverse correlation.3 When the stock market thrived, gold prices usually stalled or fell. This “tug-of-war” occurred for three main reasons:

• Risk Sentiment: Investors aggressively pursue growth (stocks) during “risk-on” periods and flee to gold (safety) during “risk-off” cycles.
• Opportunity Cost: Because gold pays no dividends, high stock returns make holding the metal “costly” in terms of missed gains.
• Monetary Stability: Gold acts as a hedge against a weak dollar. Consequently, a currency crisis typically hurts stocks while simultaneously boosting gold.

The Great Breakdown of Gold in 2024 and 2025

The investment playbook broke recently. This was not a sudden shift, but rather an acceleration that consolidated a new, aggressive trend:

• The 2024 Anomaly: For the first time in the modern era, Gold and the S&P 500 both gained over 25% in the same year. In August 2024, their correlation hit a record 0.91, as they moved in almost total synchrony.
• The 2025 Consolidation: Last year, the market witnessed simultaneous all-time highs. Stocks rose on the AI boom, while Gold climbed due to mounting fears regarding the massive US fiscal deficit.

Why Did This Happen?

In a startling turn for early 2026, the traditional rulebook has been discarded. We are currently seeing a positive correlation, where both Gold and the S&P 500 reach all-time highs simultaneously (with gold hovering around $4,500 – $5,000 per ounce). This breakdown is driven by three modern forces:

• Global Debt & Dollar Debasement: National debt has reached levels that trigger fears of permanent inflation. As a result, institutions buy the S&P 500 for earnings growth and Gold to protect against a devaluing currency. They no longer choose one or the other; they buy both.
• Central Bank Dominance: Central banks worldwide are diversifying their reserves away from Treasuries at a record pace. This “non-cyclical” buying pressure keeps gold prices high, regardless of how well Wall Street performs.
• Interest Rate Expectations: Anticipation of Fed rate cuts in Q1 2026 has reduced real yields. This makes stocks more valuable (cheaper debt) and gold more attractive (lower opportunity cost) at the same time.

Q1 2026 Outlook: What Should We Expect?

As we advance through the first quarter of 2026, the market sits at a critical junction. The primary question is: will this direct correlation persist, or will we return to the old dynamics?

The Case for Continued Direct Movement

Analysts expect this direct correlation to hold through most of Q1. Specifically, as long as the AI-driven earnings boom continues and central banks keep accumulating gold, both assets will benefit from the massive global liquidity in the system.

The Return to Decoupling

Conversely, we will likely see a “Grand Decoupling” toward the end of the year. Historically, periods where “everything rallies” mark the final stage of a market cycle. If a sudden economic shock occurs, investors will liquidate winning stock positions to cover losses, while Gold will separate to become the only remaining safety net.

Strategic Summary for Investors

The current movement “in unison” is an anomaly fueled by debt and liquidity. While it is profitable now, astute investors must prepare for an eventual return to the mean. Once the market realizes that corporate growth cannot outrun structural currency debasement forever, the traditional inverse correlation will reclaim its throne.

CHFJPY: ⬆️ Buy

• CHFJPY reversed from support area
• Likely to rise to resistance level 198.50

CHFJPY currency pair recently reversed from the support area between the pivotal support level 196.00 (former resistance from November and December) and the 38.2% Fibonacci correction of the upward impulse from November.

The upward reversal from this support area continues the active intermediate impulse wave (3).

Given the strong daily uptrend and bullish Swiss franc sentiment seen today, CHFJPY currency pair can be expected to rise to the next resistance level 198.50 (top of the previous impulse wave 1).