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Daily Pivots: (S1) 184.71; (P) 185.13; (R1) 185.43; More...

Intraday bias in EUR/JPY is back on the upside as breach of 185.55 suggests resumption of the long term up trend. Next target is 186.31 projection level. Firm break there will target 138.2% projection of 151.06 to 173.87 from 172.24 at 189.94. On the downside, below 184.77 will delay the bullish case and turn intraday bias neutral again. But further rally is expected as long as 182.75 support holds, in case of retreat.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Considering bearish divergence condition in D MACD, upside could be capped by 186.31 on first attempt. Still, outlook will stay bullish as long as 55 W EMA (now at 172.58) holds, even in case of deep pullback. Sustained break of 186.31 will pave the way to 78.6% projection at 194.88 next.

Market sentiment staged a sharp U-turn after signs that U.S.–European tensions over Greenland had moved toward resolution. The immediate risk of a transatlantic trade war has been averted for now, allowing investors to unwind defensive positioning built earlier in the week. The pivot lifted global equities, with Japan leading the charge in Asia, while European Indexes jumped at the open. U.S. equity futures also strengthened, building on yesterday’s firm Wall Street close.

Meanwhile, Gold and silver retreated from record highs, signaling a pullback in geopolitical hedging demand. In rates, U.S. 10-year yields slipped back below 4.25%, after briefly breaching 4.30% earlier in the week as term premium surged on political risk.

The catalyst came late Wednesday when US President Donald Trump said he had secured a “framework” deal on Greenland. Trump said the agreement would grant the U.S. and its European allies access to mineral rights and cooperation on the proposed Golden Dome missile defense initiative. Crucially, Trump added that punitive tariffs scheduled for February 1 on several European countries would no longer be imposed, directly removing the market’s most immediate escalation risk.

Speaking minutes after the social media post in an interview with CNBC, Trump described the Greenland arrangement as the “concept of a deal.” He offered few details, saying the proposal was complex and would be explained later, but reiterated that minerals and missile defense cooperation were central.

European reaction was cautiously constructive. Danish Prime Minister Mette Frederiksen welcomed the shift, saying Denmark was prepared to hold talks with Washington on the Golden Dome plan. She also said it was “good and natural” that Arctic security had been discussed between Trump and Mark Rutte at the World Economic Forum, reinforcing the view that the matter is being handled within an alliance framework.

In FX markets, Australian Dollar is leading the performance table for the day, alongside the New Zealand Dollar, both benefiting from the risk-on turn. Aussie is drawing additional support from strong jobs data, which has lifted expectations for an RBA rate hike in February. At the other end, Yen is the weakest performer, followed by Dollar. European majors are mixed in the middle, trading alongside Loonie.

Australia jobs surge 65.2k in December, unemployment drops to 4.1%

Australia’s labor market delivered a major upside surprise in December, reinforcing the picture of persistent tightness. Employment surged 65.2k, more than double expectations of 26.5k, driven primarily by a strong rise in full-time jobs (+54.8k), with part-time employment also increasing (+10.4k).

The strength fed directly into the unemployment rate, which fell from 4.3% to 4.1%, far below expectations of 4.4% and matching the joint-lowest level since December 2024. The participation rate held steady at 66.8%, while monthly hours worked rose 0.4% mom, signaling that labor demand remains robust rather than superficial.

According to Sean Crick, head of labour statistics at Australian Bureau of Statistics, the drop in unemployment was partly driven by more younger people entering the workforce. Even so, the scale of job creation highlights an economy that continues to absorb new entrants with ease.

RBA hike risks jump, AUD/USD heading to 7.2, AUD/JPY to 110

The Australian Dollar surged sharply as markets aggressively repriced interest-rate expectations following much stronger-than-expected jobs data. The rally reflects a swift reassessment of policy risk, with labor market resilience undermining the assumption that unemployment would drift higher and cool inflation pressures on its own.

The key shift is the absence of any rise in unemployment, which raises the risk that inflation could re-accelerate without additional policy restraint. In that context, markets are increasingly open to the idea that another rate hike may be required in the near term to keep price pressures contained.

That said, conviction remains conditional. The decisive input will be next week’s quarterly inflation report, which is likely to determine whether labor strength translates into a renewed inflation problem or simply reflects lagging labor-market adjustment.

Technically, AUD/USD broke above 0.68 handle, with D MACD suggesting the move is accelerating. The next immediate target sits at 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. As long as 0.6667 support holds, near-term outlook remains bullish, even if consolidation emerges along the way.

More importantly, the current advance strengthens the case that the rally from 0.5913 is reversing the entire downtrend from 2021 high at 0.8006. Firm break above 0.6941 would be a solid confirmation. Next target will be at around 0.72, which is 100% projection at 0.7213, which is close to 61.8% retracement of 0.8006 to 0.5913 at 0.7206.

AUD/JPY is also surging, with the uptrend from 86.03 (2025 low) on track to retest 109.36, 2024 high. Given current momentum, a break above that level is likely to resume the long-term uptrend from 59.85 (2020 low). In any case, outlook will stay bullish as long as 105.20 support holds.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 184.71; (P) 185.13; (R1) 185.43; More...

Intraday bias in EUR/JPY is back on the upside as breach of 185.55 suggests resumption of the long term up trend. Next target is 186.31 projection level. Firm break there will target 138.2% projection of 151.06 to 173.87 from 172.24 at 189.94. On the downside, below 184.77 will delay the bullish case and turn intraday bias neutral again. But further rally is expected as long as 182.75 support holds, in case of retreat.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Considering bearish divergence condition in D MACD, upside could be capped by 186.31 on first attempt. Still, outlook will stay bullish as long as 55 W EMA (now at 172.58) holds, even in case of deep pullback. Sustained break of 186.31 will pave the way to 78.6% projection at 194.88 next.

The Australian Dollar surged sharply as markets aggressively repriced interest-rate expectations following much stronger-than-expected jobs data. The rally reflects a swift reassessment of policy risk, with labor market resilience undermining the assumption that unemployment would drift higher and cool inflation pressures on its own.

The key shift is the absence of any rise in unemployment, which raises the risk that inflation could re-accelerate without additional policy restraint. In that context, markets are increasingly open to the idea that another rate hike may be required in the near term to keep price pressures contained.

That said, conviction remains conditional. The decisive input will be next week’s quarterly inflation report, which is likely to determine whether labor strength translates into a renewed inflation problem or simply reflects lagging labor-market adjustment.

Technically, AUD/USD broke above 0.68 handle, with D MACD suggesting the move is accelerating. The next immediate target sits at 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. As long as 0.6667 support holds, near-term outlook remains bullish, even if consolidation emerges along the way.

More importantly, the current advance strengthens the case that the rally from 0.5913 is reversing the entire downtrend from 2021 high at 0.8006. Firm break above 0.6941 would be a solid confirmation. Next target will be at around 0.72, which is 100% projection at 0.7213, which is close to 61.8% retracement of 0.8006 to 0.5913 at 0.7206.

AUD/JPY is also surging, with the uptrend from 86.03 (2025 low) on track to retest 109.36, 2024 high. Given current momentum, a break above that level is likely to resume the long-term uptrend from 59.85 (2020 low). In any case, outlook will stay bullish as long as 105.20 support holds.

Australia’s labor market delivered a major upside surprise in December, reinforcing the picture of persistent tightness. Employment surged 65.2k, more than double expectations of 26.5k, driven primarily by a strong rise in full-time jobs (+54.8k), with part-time employment also increasing (+10.4k).

The strength fed directly into the unemployment rate, which fell from 4.3% to 4.1%, far below expectations of 4.4% and matching the joint-lowest level since December 2024. The participation rate held steady at 66.8%, while monthly hours worked rose 0.4% mom, signaling that labor demand remains robust rather than superficial.

According to Sean Crick, head of labour statistics at Australian Bureau of Statistics, the drop in unemployment was partly driven by more younger people entering the workforce. Even so, the scale of job creation highlights an economy that continues to absorb new entrants with ease.

Full Australia employment release here.

EUR/USD held steady at 1.1684 on Thursday, following three days of heightened volatility. This stabilisation comes as geopolitical and trade tensions between the US and Europe over Greenland ease.

US President Donald Trump has de-escalated tensions by ruling out the use of military force to gain control of Greenland and softening his tariff rhetoric towards European nations after reaching a framework agreement with NATO. However, the details remain unclear, and Denmark has already stated that it is not considering negotiations over transferring the territory to the US.

On the US domestic front, attention is shifting to the release of data on initial unemployment claims, which could provide further insights into the labour market. The Federal Reserve is expected to keep rates unchanged at its next meeting, although the market anticipates a total rate cut of 50 basis points by the end of the year.
The US dollar has seen general strength against the euro but continues to weaken against the Australian and New Zealand dollars.

Technical Analysis

On the H4 chart, EUR/USD is consolidating around 1.1683. We anticipate a downward movement, with the potential for the bearish trend to continue towards 1.1628, possibly 1.1598. This scenario is supported by the MACD indicator, which shows the signal line above zero and pointing downward, reflecting ongoing bearish momentum.

On the H1 chart, a wave of decline is forming towards 1.1644. After reaching this level, a correction to 1.1690 is expected, followed by a further decline to 1.1620. This outlook is confirmed by the Stochastic oscillator, whose signal line is below 50 and pointing downward to 20.

Conclusion

EUR/USD remains in a consolidation phase, with a bearish trend still in play. Geopolitical tensions have subsided, but risks remain. Investors are closely watching US labour market data, which may influence the next moves for the dollar and euro. Technically, the pair remains in a downward bias, with key support levels at 1.1628 and 1.1598.

Surprisingly strong labour market data means the RBA’s February decision will (again) hinge on next week’s inflation data. Chance of a hike shifts closer to a 50:50 call but could end up being an awkward ‘one-and-done’.

• RBA does not really run policy by just reacting to the latest trimmed mean inflation print, but sometimes it looks that way. The inflation data (due next week) will once again have the casting vote in the RBA policy meeting in February.
• Stronger labour market and consumer spending data are feeding into a narrative that the Australian economy is running too hot. We think the true situation is more nuanced, with supply capacity expanding faster than the RBA and some others believe. Even so, these stronger data offset the downward revision to our expectations for Q4 inflation. An upside surprise next week relative to these downwardly revised inflation expectations will tip the balance over to a February hike.
• While the near-term starting point for domestic demand and the labour market is stronger than previously understood, a near-term hike will dampen the outlook further out. It will also pose some awkward questions about why policy needs to be almost as tight to squeeze out the last half a point of inflation as it was to reduce from 8% to 3%, and why it needs to be so much higher than expected in peer economies.

In a recent interview, RBA Deputy Governor Andrew Hauser complained that some people seemed to think the RBA runs policy as a knee-jerk response to the latest inflation data. That is not really how they do it, of course. The RBA looks at every piece of data, including some things the private sector does not get to see. Yet for the past year or so, quarterly CPI prints, especially the trimmed mean, have been unusually consequential for monetary policy decisions.

If it is any consolation to Deputy Governor Hauser, we are as annoyed about this as he seems to be. Things should never be this line-ball, but it is partly an outworking of the RBA’s decision-making process. When the other data are finely balanced, the data point that comes out last gets the casting vote. And because the forecast rounds ahead of RBA meetings are timed to take place just after that CPI release, it appears as if everything turns on it.

In addition, the RBA’s current assessment of the balance of supply and demand in the economy – and the weight this has in its decision-making – makes the inflation print even more consequential. If inflation surprises on the upside, its thinking goes, it must therefore be that the balance of supply and demand was tighter than previously believed. For any given GDP outcome, this therefore leads the RBA to conclude that supply capacity is weaker than previously thought, and this conclusion from the inflation print is carried forward into the RBA’s view of the broader outlook. While more recently there have been some attempts to triangulate this view of supply against business survey measures, by design recent inflation surprises heavily influence policy outcomes.

With this week’s release of surprisingly strong labour market data for December, we are – once again – in the position of the cash rates view hinging on the CPI print next week. We have previously flagged the possibility that another uncomfortably high inflation result will induce a near-term hike in the cash rate at the February meeting. That possibility shifted closer to a 50:50 bet with the labour market data. It could tip over the line if trimmed mean inflation prints higher than expected.

At the same time, we note that the first two months of the quarter point to some downside risk to the inflation print. We have incorporated some of this into our nowcast for inflation, with the quarterly trimmed mean measure now expected to print at 0.7%qtr (3.1%yr). An outcome at this level or lower should be enough to stay the RBA’s hand, at least for now. The rhetoric would remain hawkish, but such a result would support the RBA’s earlier assessment that some of the surprise September quarter inflation result reflected temporary factors.

If, however, the December quarter inflation result surprises us on the upside next week, the RBA will likely see little alternative to raising the cash rate in February. Such a response would buy into a narrative that the Australian economy is running too hot with interest rates at current levels. The RBA might even take the view that policy has been stimulatory with the cash rate at current levels and that the previous cuts were in hindsight a mistake. We would not draw that conclusion, but we can see how recent consumer spending and labour market data would lend themselves to it. And although the near-term demand picture is stronger, a February hike would induce a weaker outlook further out.

If the RBA does end up hiking in February, it would be unlikely to follow that up with a back-to-back hike in March. Even with a more hawkish view of where ‘neutral’ policy settings are, a 50bp increase would take the cash rate almost all the way back to the peak in rates that everybody at the time thought was very restrictive. It would seem odd if almost the same policy setting was needed to get underlying inflation from the low 3s to 2½% as was needed to get inflation from 8% to 3%, but that is the implication of a two-hike forecast. Instead, a ‘one-and-done’ (or at least ‘one then wait and see’) path might be the outcome. Typically, people rule out a single 25bp move and expect multiple moves, given how little difference a 25bp move makes to inflation forecasts. Nowadays, though, the RBA is in the business of fine-tuning policy to hit that 2½% target midpoint. It might flag the possibility of further hikes in the post-meeting communication but not end up following through.

Also odd is the implication that – if market pricing and bond yields are any guide – Australia apparently needs higher rates than all its peers for years to shake out that last half a point or so of disinflation. Some observers will note that Australia did not hike as far as many of its peers and has seen less of a slowing in the labour market (which was the intent!), but it seems like a big difference now to offset what were not huge differences at the peak.

Part of the issue seems to be the belief that Australia cannot grow faster than about 2% before stoking inflation, much slower than in the past, and yet is actually growing faster than this. We have previously discussed how sensitive these judgements are to underlying assumptions. The thing is, the only way to judge how fast supply capacity is growing in real time is to see how inflation performs given actual growth in output. Once again, trimmed mean inflation gets the casting vote.

Markets

The much-anticipated visit at the World Economic Forum in Davos by US President Trump defused the Greenland crisis. During his keynote address, risk sentiment turned less sour after excluding the tail risk of using military force to obtain the “giant piece of ice”. Instead he floated the short term prospect of immediate talks on acquiring Greenland. After European close and following several bilateral meetings including with head of NATO, Rutte, Trump turned to social media announcing a framework for a future deal on Greenland (and the broader arctic region). He dropped the February 1st tariff treat (10%) against eight EU nations and also touted that the US would be involved in Greenland’s mineral rights. The US storyline so far hasn’t been really confirmed/challenged from the European side, though the Danish foreign minister said that the day ended better than the way it started. Financial markets in any case didn’t wait to get the specifics on what has been agreed upon or how the road forward towards a deal exactly looks like. European stock markets erased losses after the WEF speech to close near unchanged. US stock markets grabbed more momentum thanks to social media details, closing up to 1.2% higher. FI and FX markets also retraced on Tuesday’s sell America move. US Treasuries outperformed German Bunds in a bull flattening move that sends the long end of the curve up to 6 bps lower. The German Bund curve still closed in bear steepening fashion (long end up to 3.5 bps higher). Higher energy prices (both oil, but especially gas) because of expected cold winter weather against the background of relatively low inventories are probably also at play. EUR/USD closed at 1.1685 from a start at 1.1725. Apart from the Greenland pivot, markets also welcomed the outcome of the US Supreme Court hearing on Trump’s attempt to fire Fed governor Cook for cause. Most judges side with lower court rulings that the administration is overstepping its authority and thereby risks weakening if not shattering the independence of the US central bank. The court is set to rule on the issue in July.

Asian stock market join the risk rally this morning with only China (flat) underperforming. The very long end of the Japanese yield curve for a second consecutive session shows signs of “stabilization” with the 30-yr yield down 5.4 bps. To put things in perspective: we haven’t returned to last Friday’s closing levels following the nasty JGB sell-off on Monday and Tuesday. Today’s eco calendar contains weekly jobless claims and (outdated & distorted) November PCE deflators and spending/income data. The ECB published minutes of its December meeting. These data/events will play second fiddle with markets looking for more clues next steps or details about the Greenland framework. The removal of the short term (tariff-escalated) tail risk is one thing, but reaching a sustained deal is still something different. US officials (Witkoff & Kushner) will travel to Russia for talks with Russian president Putin on the latest proposals on a peace plan and serve as a wildcard for trading.

News and views

The Australian Bureau of Statistics this morning published strong/stronger than expected December labour market data. The unemployment rate dropped to 4.1% from 4.3%. The number of employed people rose by 65.2k (after a 28.7k decline in the previous month), mostly driven by higher full employment. The participation rate increased from 66.6% to 66.7, mainly due to young people (15-24-y) moving into employment. The strong labour market data are adding to market expectations that the Reserve Bank of Australia might lift its policy rate already as soon as the February 03 meeting (60% discounted). Other recent data pointed to decent domestic demand with markets looking for final clues in the quarterly CPI report to be released next Wednesday. The Australian 3-y government bond yield this morning rose 6.5 bp to 4.24%. The Aussie dollar jumped higher to test the AUD/USD 0.68 barrier, trading at the strongest levels since October 2024.

The Hungarian government yesterday was reported to set up measures worth HUF 100bn (€260mn) to support the restaurant industry, including liquidity support for the sector, halving a tourism tax and allowing them to treat part of their revenue as a service fee, reducing their tax bills. Separately, Hungarian Prime Minster Orban on social media also announced that he will take extra measures to help households coping with higher energy bills in January because of cold weather. The announcement comes as the government faces a fierce political battle in the run-up to parliamentary elections to be held in April.

The US President was in Davos yesterday, in case you missed it, and he gave a speech — a long one — in which he said plenty of things that didn’t appeal much to the elite audience in the room. But his much-awaited commentary on Greenland — awaited with fear and pessimism — was not that aggressive.

Donald Trrump said he still wants Greenland, but that he would not move into Greenland or take it over by military force. He also dropped the latest tariffs on eight European countries that opposed the idea of Greenland being bought by the US. Great News!

Markets rallied in relief.

Now yes, this may sound pathetic, but this is how markets have functioned since last year: sell the punch, buy the pullback.

Gold fell, but the price of an ounce remains above the $4’800 level. It was not smashed — a reminder that investors remain somewhat... sceptical. And it’s not just investors: central banks are replacing their US Treasury reserves with gold, a trend that is likely to continue as US international policies become blurrier and more unpredictable by the day, regardless of short-term ups and downs.

In FX, the US dollar rebounded on the de-escalation around Greenland, while US 10-year yields retreated — also helped by a rebound in Japanese bonds, which pulled long-dated JGB yields lower after early-week stress that bordered on a flash crash.

The S&P 500 rebounded more than 1% and the Nasdaq 100 gained 1.36%, with Nvidia jumping nearly 3% after CEO Jensen Huang said scaling AI infrastructure would require trillions of dollars in investment. Disco Corp — a supplier of high-precision semiconductor processing machines used by TSMC, which manufactures Nvidia’s chips — jumped 17%. SK Hynix and Samsung, key memory-chip suppliers, extended their rally, pushing the Kospi to a fresh record high. The Korean index is now up around 20% year-to-date.

Optimism is further fuelled by reports that OpenAI is looking to bring in additional investors from the Middle East.

Interestingly, not everyone in the broader OpenAI ecosystem was reacting positively yesterday. The reactions were significantly different. Oracle fell 3%, Microsoft declined more than 2%, while Intel jumped more than 11% — a notable move for a company about to report another decline in earnings and revenue amid AI delays and ongoing pressure in the PC market. We’ll see how the earnings update goes tonight.

Zooming out, overall market mood has improved. European futures are looking bullish this morning, with Euro Stoxx futures up more than 1.2% at the time of writing, seemingly eager to benefit from TACO Trade v2.0. Nasdaq futures are leading gains among major US indices.

That said, this season of TACO gains could prove less impressive than last year’s. First, there is still no clarity on Greenland — although the fact that Europeans appear willing to draw a red line is a constructive development. Second, there has been no major market stress so far; losses were relatively modest, which also limits the size of the rebound.

What’s next? Markets will continue to react emotionally to US headlines — that won’t change. Uncertainty and sudden volatility spikes will remain on the menu this year. But as a former French prime minister said in reaction to the US president’s Davos speech, people should not react to words — and there are a lot of them coming out of the White House — but to actions. He meant it politically and geopolitically, but the logic applies just as well to markets. That, ultimately, is what the TACO trade is about: stripping out the noise and cutting the grease from overreaction.

Which brings us back to South Korea and the importance of hedging currency risk when diversifying away from the US. The Kospi’s stellar performance does not reflect the broader economy. The grass is not greener there. South Korea’s economy contracted 0.3% in Q4 last year, missing expectations for 0.1% growth due to weak domestic demand and declining exports outside semiconductors.

In short, technology is driving Korean equities higher — much like in China, where tech rallies mask weak domestic demand, the property crisis, deflation and an ageing population. As a result, the Korean won has been weakening, meaning part of the Kospi’s gains comes from currency effects. Investors should therefore hedge FX exposure when venturing into Asia.

Even US dollar exposure has been increasingly hedged by European investors since last year, on the assumption that the dollar may not offer protection if a global sell-off is triggered by US policy itself.

In focus today

In Norway, we expect Norges Bank to keep the policy rate unchanged at 4.00% at the monetary policy meeting today. We also expect Norges Bank to signal that 'there is some time until the next rate cut', implying that the threshold for a cut in March is high. This would be in line with the signals given at the December meeting. Considering that unemployment has come in marginally below and inflation marginally above expectations from December, the risk is tilted towards a somewhat more hawkish message than in December. This is an interim meeting, without new economic projections but with a press release and a press conference.

In the euro area, focus turns to the minutes from the December ECB meeting and the flash consumer confidence indicator for January. We will give the ECB minutes an argus-eyed review for any signals about the next rate move. However, we expect a limited market reaction.

In Denmark, the January consumer sentiment indicator is due. We forecast a decline, driven by more negative perceptions of the economy, likely influenced by Trump's interest in Greenland. However, confidence should improve in 2026 as inflation eases, supported by the removal of the electricity tax.

Overnight, the Bank of Japan concludes a two-day policy meeting. With the December rate hike in mind and an upcoming election next month, Bank of Japan will stay on hold, even if a weaker yen continues to feed the inflation problem. Ahead of the decision, we will look for fresh inflation data as well as PMIs.

Economic and market news

What happened yesterday

In geopolitics, yesterday was a day of mixed signals. At the World Economic Forum in Davos, Trump dismissed military action but urged immediate negotiations to acquire Greenland, warning the US would "remember" if no deal was reached. The EU responded by freezing the ratification vote on the EU-US trade deal. Later, following talks with NATO Secretary Rutte, Trump announced a U-turn, stating that "a framework of a future deal" regarding Greenland and the entire Arctic Region had been reached. He also confirmed the cancellation of tariffs set for 1 February. VP Vance and Secretary of State Rubio, Special Envoy Witkoff among others will be responsible for the negotiations. The proposed deal reportedly grants the US access to Greenland's mineral rights, blocks Russian influence, integrates the Golden Dome defence system, and opens doors to US-backed infrastructure investments. Rutte confirmed Greenland's status within the Kingdom of Denmark was not discussed. According to New York times, officials have drawn comparisons between the potential sovereignty over small pockets of Greenland and the status of UK bases in Cyprus, which are classified as British territory. Today, EU leaders will meet at an emergency summit in Brussels to discuss their approach.

In the UK, headline CPI data came in at 3.4% y/y, slightly above consensus, while core CPI was 3.2% y/y, slightly below consensus. Service inflation remains elevated at 4.5% y/y. Two out of the last four prints have been soft, but further disinflationary signs are needed to trigger the next cut.

In the US, the Supreme Court heard oral arguments in the Lisa Cook case. Justices appeared sceptical about Trump's push to fire Cook over alleged mortgage fraud and disagreed with the administration's claim that the president has 'broad discretion' to remove Fed members, citing concerns over Fed independence. They were also frustrated with the administration for bypassing lower courts. While the court seems reluctant to support Cook's dismissal, it remains cautious about creating a precedent that could affect the removal of Fed officials in cases of misconduct.

Equities: Global equity markets staged an almost full reversal of Wednesday's moves yesterday. Cyclicals outperformed, led by the US, broadly in line, in direction and timing, with statements from the US President indicating that tariffs on selected European countries will not be implemented on 1 February, alongside confirmation of a framework agreement with NATO regarding Greenland.

What is at least as notable is where we did not see a reversal. Small caps and value continued to outperform. Small caps have now outperformed on all but one trading day so far this year, which fits well with the underlying fundamental backdrop. This is also a useful reminder that rather than attempting to anticipate the next political headline, markets continue to reward a focus on fundamentals. Asian equities are higher this morning, with the Korean KOSPI approaching a 20% year-to-date gain. European and US equity futures are also pointing higher.

FI and FX: Market sentiment improved substantially yesterday following Trump initially stating he would not take Greenland by force and subsequently when he on social media announced that the Greenland-related tariffs on Denmark and a handful of other European backers were cancelled. Seemingly a framework for a deal around Greenland including mineral rights, small pockets of land, US investments and security planning has been reached - but very little has been confirmed at this stage. EUR/USD has fallen back below the 1.170 on the news while the US curve has flattened on the short-end selling off, and the long-end delivering some slight performance.

The short-term Elliott Wave outlook for Oil (CL) shows the cycle from the June 23, 2025 peak ended at the December 16, 2025 low of $54.98. After this completion, Oil began correcting the prior cycle in a larger degree, expected to unfold in either three or seven swings. From the December 16 low, wave ((i)) advanced to $58.88. The pullback in wave ((ii)) developed as a zigzag structure. Within this correction, wave (a) ended at $56.65, wave (b) reached $58.87, and wave (c) declined to $55.76. This sequence completed wave ((ii)) in higher degree.

Oil then resumed higher in wave ((iii)), subdividing into five waves. From wave ((ii)), wave (i) ended at $57.17, followed by a pullback in wave (ii) that concluded at $55.86. Wave (iii) advanced to $59.8, while wave (iv) corrected to $58.45. The final leg, wave (v), extended to $62.36, completing wave ((iii)) in higher degree. A corrective phase unfolded in wave ((iv)), again forming a zigzag. From wave ((iii)), wave (a) ended at $59.19, wave (b) advanced to $61.85, and wave (c) declined to $58.7. This completed wave ((iv)) in higher degree. Oil has since turned higher in wave ((v)). From wave ((iv)), wave (i) ended at $60.68, while the pullback in wave (ii) concluded at $59.22. Near term, as long as the pivot at $55.76 remains intact, Oil is expected to continue higher.

Oil (CL) 60 minute chart

CL Elliott Wave video:

https://www.youtube.com/watch?v=-K7iVdxA6uo