Morning Macro Update

The US dollar index has hit a four-month low, leading to a surge in the Australian dollar, which crossed the 69 cent level at the beginning of the trading week. Meanwhile, gold and silver prices have soared, and Wall Street is anticipating this week’s inflation report. Oil prices reached a new weekly high due to Iranian tensions, while US 10-year Treasury yields have remained steady but above the 4.2% mark.

In Asian stock markets, Chinese shares saw a slight decline, with the Shanghai Composite maintaining above 4100 points and the Hang Seng Index slightly up at 26765 points. The Hang Seng Index daily chart has shown fluctuations around the 26000 point level in recent months, with recent weakness transforming into strength.

The Japanese Nikkei 225 experienced a nearly 2% drop due to Yen volatility amid domestic inflation concerns. Despite some wavering during the Bank of Japan hike in previous weeks, the Nikkei has strengthened around the 50000 point level, with the selloff in Japanese bonds and the sudden election snap call causing concern.

Australian stocks were closed for Australia Day, with the ASX200 expected to rise following Wall Street’s positive performance. The ASX200 daily chart exhibits strengthened short-term support after paused movement before Christmas, indicating a potential breakout above the 8800 point area.

European markets, specifically the Eurostoxx 50 Index, closed marginally higher at 5957 points, aiming to recover after a recent rally breakdown. Despite elevated valuations thwarting market progress, solid short-term support has propelled markets above recent highs, signaling a strong start to 2026.

In the US, Wall Street saw positive gains driven by a weaker USD. The NASDAQ and S&P500 both rose by 0.5%, with the S&P500 closing at 6950 points. A notable inverted J pattern has been observed in recent market trends, with an upward trajectory from the 6800 point level potentially indicating a market breakthrough.

Across currency markets, there has been a significant shift away from the USD, with the Euro leading this anti-USD sentiment by surging past the 1.18 handle. The USDJPY pair has plummeted to the 154 level, highlighting a massive rout against the USD. The Australian dollar has also seen a notable increase alongside gold prices, surpassing the 69 handle.

Oil markets experienced a monthly downtrend before escalating due to Venezuelan tensions. While Brent crude briefly broke above $65USD per barrel, it has since settled into a sideways pattern. Additionally, gold has surged past $5000 USD per ounce, indicating a potential blowoff pattern despite some recent volatility.

Overall, market dynamics are reflecting a shifting landscape with various factors influencing global markets. From the weakening US dollar to geopolitical tensions impacting oil prices, investors and traders are navigating a complex and ever-changing financial environment.