• Weaker USD. US equities rose again while the USD remains under pressure. EUR at a multi-year high. AUD touched highest point since Q1 2023.• Macro trends. Q4 Australian CPI out today. Will it help or hinder RBA rate hike expectations? US Fed meets tomorrow. No changes anticipated. Global Trends A few of the recent major market themes continued overnight with European/US equities rising and the USD remaining under downward pressure. More specifically, the US S&P500 (+0.5%) reached a record high while the tech-focused NASDAQ jumped up 0.9% to be within a whisker of its historic peak. US bond yields were little changed with the 10yr rate tracking near 4.23%, just below its 1-year average. Across commodities, gold is just shy of US$5200/ounce, and WTI crude oil gained ~2.8% (now ~US$62.30/brl, the top of the range it has occupied since October) with concerns about the US’ military presence in the Middle East and impact from the US winter factors impacting demand and supply thinking. In...

The dollar is tumbling through technical barriers across most major currency pairs after US president Donald Trump told reporters “I could have it go up or down like a yo-yo,” and that he’s not concerned about its recent decline, saying “Look at the business we’re doing. The dollar’s doing great”. “If you look at China and Japan, I used to fight like hell with them, because they always wanted to devalue,” he said, but “it’s hard to compete when they devalue”. The president’s comments suggest that recent (rumoured) moves to support Japanese currency intervention—intended to raise the value of the yen—may be part of a concerted effort to force a depreciation in the dollar relative to its major trading counterparts. This strategy could help reduce trade imbalances over time, but risks generating extreme financial turbulence and creating distortions in other areas of the global economy. As per usual, we would caution against extrapolating moves too far—the president could easily reverse...

Foreign exchange markets are enjoying a brief period of respite, with most major pairs showing signs of mean reversion after the weekend’s sharp moves. The dollar is edging higher and measures of currency volatility are easing, even after President Trump issued fresh tariff threats against South Korea following similar warnings to Canada and Europe last week. Few expect the threats to be carried out, and many think the Supreme Court will place limits on such unilateral actions within the next month. Yield curves in Canada and the US are holding firm ahead of tomorrow’s central bank decisions, suggesting that investors expect policymakers to deliver calming messages. A variety of factors, from demographic changes to tariff front-running effects, are leading officials to take a careful and gradual approach to setting rates, and fundamentals in both economies remain consistent with a cautiously optimistic outlook. If fireworks appear, they will appear on the political side as the Federal...

• USD weaker. Falls in USD/JPY on back of intervention fears have weighed on USD. NZD also supported by NZ CPI. AUD near top of multi-year range.• Data flow. Q4 AU CPI due tomorrow, US Fed also meets (Thurs AEDT). AUD has had a strong run, but starting to look ‘stretched’ on momentum gauges. Global Trends A few of the recent market themes have remained in place over the past couple of sessions. Risk sentiment has remained positive with the major European and US equity markets edging higher overnight (S&P500 +0.5%). Elsewhere, bond yields ticked down a bit with the US 10-year rate (now ~4.21%) slipping towards its year-to-date average, and in commodities gold’s uptrend extended (moving above US$5000/ounce for the first time) while WTI crude oil consolidated just north of US$60/brl. In FX, the USD has lost more ground. A catalyst for the latest bout of USD weakness has been the resurgent JPY. USD/JPY has fallen by ~3.2% from Friday’s peak (now ~154.11). USD/JPY is the...

Good morning. Foreign exchange markets are again facing treacherous conditions as a blizzard of macroeconomic and geopolitical risks hits the headlines. After a weekend filled with shocks—including an actual snowstorm—the dollar is succumbing to broad-based selling pressure as policy uncertainty spikes, equity futures are pointing to renewed losses at the open, and precious metals are going parabolic as investors pile into alternative currencies and asset classes. Trading desks are on intervention watch after the New York Federal Reserve reportedly conducted “rate checks” for the Treasury on Friday, fuelling speculation of coordinated action between Tokyo and Washington. We’re seeing no evidence of official foreign exchange purchases having taken place, but the news triggered a sharp, roughly 3 percent jump in the yen as traders covered short positions and braced for further volatility. For currency market veterans, the reported involvement of the US Treasury is the more intriguing...

Good morning. Price action is slowing across the financial markets as geopolitical noise levels come down, and consolidative trading patterns are emerging across most major currency pairs as investor focus pivots back toward economic fundamentals. The dollar is holding steady but remains on the defensive against an improving global growth backdrop, renewed talk of diversification away from US assets, and rising concern over fiscal trajectories. High-beta currencies such as the Australian dollar and Mexican peso have lost some momentum but are holding year-to-date gains, while demand for traditional havens is softening. Equity futures point to further gains, and Treasury yields are edging lower. Japanese trading desks saw some excitement overnight when the yen jumped almost 200 points in a matter of minutes before reversing direction and edging lower. The move appears to have been sparked by rumours of official intervention shortly after Bank of Japan governor Kazuo Ueda ended his post-decision...