No U.S. markets? No problem!
While the U.S. stock and bond markets were out on holiday, Trump’s inauguration and early policy moves provided enough volatility for the major assets on Monday.
How did your favorite assets move in the last trading sessions? Here’s what’s up:
Headlines:
- China left its benchmark one-year and five-year loan prime rates at 3.1% and 3.6% respectively in January
- Japan core machinery orders for November: 3.4% m/m (-0.7% forecast, 2.1% previous)
- Japan revised industrial production for November: -2.2% m/m (-2.3% forecast and previous)
- Rightmove: U.K. house price index rose 1.7% m/m in January after 1.7% decline in December
- Switzerland Producer and Import Prices for Dec. 2024 : 0.0% m/m (0.2% m/m forecast; -0.6% m/m previous); -0.9% y/y vs. -1.5% y/y
- Germany Producer Prices Index in December 2024: -0.1% m/m (0.4% m/m forecast; 0.5% m/m previous); 0.8% y/y vs. 0.1% y/y previous
- Donald Trump was sworn in as the 47th President of the United States; and delivered a cornucopia of promises, including restoring American greatness, tackling inflation, opening up domestic oil production, and reviving U.S. manufacturing, etc.
- Bank of Canada Business Outlook Survey for the fourth quarter of 2024 revealed a subdued overall business sentiment, although there are signs of cautious optimism.
- BusinessNZ New Zealand Services Index fell from 49.5 to 47.9 in December; Employment Index rose to 47.4 – its highest since August 2024
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets exhibited a mix of relief and caution during Trump’s inauguration day, with risk assets initially rallying on delayed tariff implementation before giving back gains as traders digested a flurry of executive order announcements.
Bitcoin had a rollercoaster of a day, spiking to almost 109,000 after Trump’s meme coin launch but dropping back to 101,700 as the hype cooled off—especially since crypto didn’t get a shoutout in his inauguration speech.
Gold stayed solid despite the thin holiday trading, bouncing between 2,690 and 2,712 before settling around 2,706. A weaker dollar and policy uncertainty kept it in demand, with late gains after Trump’s speech mentioned tariffs.
S&P 500 futures held up well, climbing from 5,990 to a high of about 6,040 before cooling off to 5,982. Traders seemed to like Trump’s softer tone on tariffs, helping extend last week’s rally.
WTI crude oil had a sharp reversal, sliding from 77.50 to 76.30 after Trump’s “energy emergency” declaration. With four straight weekly gains in the bag, oil turned defensive on talk of strategic reserve buying and policy changes, finally settling near 76.35.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The dollar had a rough day during Trump’s inauguration as traders likely dumped long positions on reports of a softer stance on trade policy. What started as a little weakness in European trading turned into a full-on selloff after news broke that the new administration would hold off on immediate tariff actions.
The Japanese yen held up, but the Greenback REALLY took a beating against the comdolls, with the New Zealand dollar leading the losses. The Swiss franc stayed surprisingly strong, while the euro and pound followed the broader trend of dollar weakness.
By the end of the day, the dollar steadied near its session lows as the markets adjusted to the idea that Trump’s trade agenda might roll out more slowly than expected. Hedge funds, sitting on their biggest long dollar positions in nine years, likely adjusted, triggering a wave of repositioning.
Upcoming Potential Catalysts on the Economic Calendar:
The European session kicks off with U.K. labor market data and Eurozone ZEW sentiment—key drivers for GBP and EUR that could shape early momentum.
Later, the U.S. session shifted focus to Canada’s CPI and New Zealand’s inflation data, both crucial for CAD and NZD traders looking for clues on central bank trajectories.
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