Headlines:
Silver rallies to new all-time highs on renewed Fed independence worriesGold jumps to a new all-time high as the DOJ seeks a pretext to fire Fed Chair PowellDollar stays on the backfoot amid unease over Fed independenceThe dollar isn’t the only major currency having a bad dayEuropean stocks pushed lower at the open, US futures a drag on threats to the FedThe market is telling Trump to stop interfering with Federal Reserve independenceFed rate cut calls get pushed back after the US jobs report on FridayEurozone investor morale clocks in better than expected to kick start the new year
Markets:
GBP leads, USD lags on the dayEuropean equities mixed; S&P 500 futures down 0.5%US 10-year yields up 3.2 bps to 4.203%Gold up 1.8% to $4,588.93WTI crude oil down 0.3% to $58.93Bitcoin up 0.1% to $90,708
The main headlines to start the week is Trump’s continued attack on Fed independence, as Powell is put under criminal investigation in a bid by the administration to try and bend the central bank to its will. Powell’s press conference was quite something and if you watched it without context, you might even think it was scripted and AI-generated. It was powerful and sends a clear message of the kind of unprecedented situation we’re seeing with the central bank.
In any case, markets are already casting their vote early and quickly. And the bottom line is, the dollar and US stocks do not like it.
The greenback suffered in European morning trade, though the larger moves came during Asia trading. EUR/USD stretched higher to close in on 1.1700 before sitting now around 1.1680, up 0.4% on the day. GBP/USD is also holding higher, up 0.5% to 1.3463 while USD/CHF is down 0.5% to 0.7975 currently.
The one major currency that failed to take advantage of the dollar’s plight is the Japanese yen. USD/JPY dipped a little to 157.60 but quickly climbed back up to near unchanged levels now at 157.88. That clearly shows the lack of appetite towards the yen as well even during a time when the dollar is struggling.
The big winner of all of this? Precious metals. Gold delivered another push to fresh all-time highs and briefly clipped $4,600 while silver jumped up over 5% to keep above $84 on the day. Up, up, and away. No stopping the metals train. 🔥
In the equities space, European indices followed US futures lower to open but investors managed to regain some composure after. The DAX is now trading higher again but there are still some light declines seen in the CAC 40 and IBEX. As for US futures though, the mood music is more pessimistic with S&P 500 futures keeping down 0.5% and Nasdaq futures down 0.7%.
Now, it’s about how Wall Street will take to the news in anticipation of some other key developments coming up later this week. We have the US CPI tomorrow, big banks kicking off earnings season, the potential Supreme Court ruling on tariffs, and of course more geopolitical headlines involving Trump and the likes of Greenland and Iran.
This article was written by Justin Low at investinglive.com.