Asset Class
FX
Global currency markets are currently characterized by a broadly stronger US Dollar, which is reclaiming its safe-haven status amid tech-sector volatility and resilient domestic services data showing persistent price pressures. In Japan, the Bank of Japan is increasingly focused on underlying trend inflation reaching 2%, yet the Yen continues to face significant pressure with USD/JPY projected to test the 160-162 range. This weakness persists despite expectations for policy normalization and rate hikes, potentially necessitating sustained intervention from Tokyo officials following the February snap election. In Europe, the British Pound is facing tactical short positions as analysts anticipate the Bank of England will eventually cut rates toward a 3% terminal rate, far exceeding current market pricing. Meanwhile, the Euro remains under technical pressure, with EUR/USD undergoing a pullback despite pockets of resilience in German industrial orders and an improving Eurozone growth outlook supported by increased defense spending. Overall, FX volatility is being driven by diverging central bank paths and a delay in US labor data, keeping market attention fixed on upcoming rate decisions and geopolitical shifts.
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Multi Asset Strategy Daily
Mizuho highlights technical resistance for US 10-year yields at 4.30% and expects steady, non-volatile policy outcomes from the ECB and BoE. Market sentiment remains cautious following a risk-off session in Asia and upcoming US-Iran meetings.
BOJ Research Justifying Rate Hikes Amid Low Inflation
Mizuho evaluates recent BOJ research indicating that 'underlying' inflation is near the 2% target, which may justify further rate hikes despite Tokyo headline CPI dropping to 1.5%.
Australian Morning Focus
The ANZ Australian Morning Focus reports mixed US data with resilient services but weak private payrolls, alongside easing Eurozone inflation. Markets saw tech-led equity declines while crude oil rose on Middle East tensions.
French Industrial Production Slips in December
French industrial production declined by 0.8% in December due to aerospace volatility, but improving business sentiment suggests a cyclical recovery in 2026.
Japan Election Preview
A big LDP win in Japan's upcoming election is expected to accelerate PM Takaichi's pro-stimulus agenda, pushing the economy toward normalization and higher JGB yields. Currency volatility remains high, with ING forecasting USD/JPY intervention near the 160 level.
FX Morning Update
The US Dollar is regaining safe-haven properties amid a tech-led momentum reversal, while GS Trading builds short GBP positions ahead of a dovish-leaning Bank of England outlook.