Morning traders, checking in from a rain-splashed IntelliTrade desk where the sky is grey, the risk screens are still flashing yesterday’s selloff, and the first espresso is doing overtime.
Overall Market Sentiment
The dominant theme today is the revival of the “Sell America” trade: investors have been selling US stocks, Treasuries and the dollar at the same time after fresh tariff threats against Europe over Greenland.The US Dollar Index has slipped to around 98.6, roughly a 0.8 percent drop over the last two sessions, and sits near a one month low.
Risk sentiment is shaky, not panicked. The S&P 500 lost just over 2 percent yesterday in its worst day since October, tech led the decline, and volatility (VIX) spiked toward the low 20s.Gold has exploded higher to new record territory above 4,800 dollars an ounce, while Brent crude has eased back toward 64 dollars as growth worries and rising inventories outweigh supply headlines.
Geopolitics and policy
Geopolitics is still the main macro shock. The US president’s push to assert control over Greenland, backed by a renewed threat of tariffs starting at 10 percent on imports from eight European allies and potentially rising further, has unnerved markets and Europe’s political leadership.The episode is not only about territory, it is about strategic rare earths and NATO leverage, which is why it has quickly turned into a global risk story rather than a quirky side headline.
The classic response pattern is in play: US and European equities are under pressure, the dollar has been sold along with Treasuries, and gold is now comfortably above 4,800 dollars as a high conviction hedge against political and debt risk.At the same time, currencies seen as institutional or geopolitical havens, particularly CHF and to a lesser extent JPY, are drawing interest.
Assumption: tariffs begin at 10 percent on 1 February and negotiations over the coming week focus on scope, exemptions and sequencing rather than a full reversal of the plan.
Day ahead and week ahead: key catalysts
Today (Wednesday):
- The focus is on the US data block with Q3 GDP and core PCE figures in the New York morning. Markets want to see whether growth is still running near the low 2 percent area and core inflation near the high 2s. Anything that hints at softer growth and benign inflation will reinforce the current dollar weakness and bond bid.
- Earnings season continues, especially large US tech and communication names, which matters for risk sentiment after yesterday’s sharp equity drop.
Thursday:
- New Zealand CPI for Q4 could reshape the market’s view on how soon the RBNZ might ease further, which matters for NZD crosses after the recent bounce.
- Ongoing commentary from European and US officials on tariffs will be watched for any hint of de-escalation that might calm equities and the dollar.
Friday:
- The big global macro cluster is flash PMIs for January across the US, eurozone, UK, Japan and Australia, released through the day and providing the first broad read on how business sentiment is coping with the new year’s geopolitical shock.
- The Bank of Japan policy decision lands in Asian hours around Friday local time. The policy rate is expected to stay at 0.75 percent, but the tone on future hikes and any mention of FX will be key for JPY and global bond yields.
Currency outlooks
🔻 USD – “Sell America” back in fashion, data can slow the slide
The dollar is on the back foot. The Dollar Index has dropped from around 99.4 late last week to near 98.6, its weakest level in roughly a month, as investors sell US stocks and Treasuries together and look for alternatives in gold and selected FX havens.
Rate expectations have nudged slightly more dovish, but the market is still only pricing a modest easing path rather than an aggressive cutting cycle. What has really shifted is confidence in US policy stability, given the combination of renewed tariff threats and ongoing political pressure around the Federal Reserve.
For today, GDP and PCE will decide whether this turns into a deeper dollar downtrend or just a sharp shakeout. Softer growth and tame inflation would validate the current move lower, while stronger readings could quickly dampen enthusiasm to keep selling USD at these levels. Overall, near term risks remain tilted to further dollar weakness, but the pace is likely to be more data dependent from here rather than purely headline driven.
⚖️ EUR – Helped by weaker USD, hurt by being in the tariff crosshairs
EURUSD is trading in the high 1.17s, having pushed above 1.1740 as the dollar dropped on the Greenland story and broader “Sell America” mood.Euro area data have been mixed but broadly consistent with low positive growth and easing inflation, which keeps the ECB in wait-and-see mode.
The complication for the euro is that the region sits directly in the tariff blast zone. Export heavy economies and auto-linked sectors are particularly exposed, which is why European equities underperformed yesterday even as EURUSD rose on the back of dollar selling.
Traders broadly see 1.17–1.19 as the short term range to monitor, with 1.1750/1.1800 the area that needs to hold to keep the recent upside momentum intact.For the rest of the week, euro performance is likely to hinge on how European leaders respond rhetorically to tariffs and whether Friday’s Eurozone PMI data hint at renewed softness or confirm that activity is merely “subdued but growing.”
Given those opposing forces, EUR risks look broadly balanced in the near term: supported against USD by policy and flows, but capped by trade uncertainty and fragile domestic growth.
🔻 GBP – Benefiting from dollar weakness, still structurally fragile
GBPUSD has climbed toward the mid-1.34s, with spot trading around 1.345–1.346 as dollar selling outweighs concerns about the UK’s vulnerability to tariffs and its own soft data.
Domestically, growth remains modest and the Bank of England is expected to keep Bank Rate steady after already cutting late last year. Wage growth has cooled and inflation is moving closer to target, which leaves less rate support for the pound compared with currencies whose central banks are still firmly on hold.
In the very short term, GBP is riding the same wave as EUR and other majors against a softer USD, but risks for sterling still lean slightly bearish for the week. Any escalation in tariff rhetoric that singles out UK exports, or a negative surprise from UK data around the PMIs on Friday, would likely weigh more on GBP than on the broader G10 basket.
⚖️ CAD – Pulled between cheaper oil and a weaker USD
USDCAD is hovering in the 1.38s, with recent lows around 1.383–1.384 after a retreat from last week’s highs above 1.39.A softer dollar and resilient Canadian inflation have helped the loonie stabilize, but the tailwind is partly offset by lower oil prices and global growth worries.
The Bank of Canada sits with rates in the low 2 percent area and is not in a hurry to move aggressively in either direction, which leaves CAD taking most of its cues from external drivers: US yields, risk appetite and crude.For the rest of this week, risks for CAD look roughly balanced: sustained dollar weakness and any stabilization in Brent around 64 dollars would support further mild USDCAD downside, while a rebound in the dollar or a renewed equity wobble could quickly push the pair back toward the 1.39 handle.
🔺 CHF – The quiet winner of “world without rules” sentiment
The Swiss franc continues to attract demand as investors look for a haven that is insulated from both tariff cross-fire and domestic political drama. EURCHF has slipped toward 0.926–0.927, a four week low in that cross, while USDCHF trades just under 0.80 after a steady grind lower in recent sessions.
Swiss inflation is flirting with the bottom of the national target range and the SNB’s policy rate around 0 percent gives policymakers plenty of space to tolerate a firmer currency, especially when imported inflation risks from energy and food remain a concern.In practice, CHF is trading as both a safety valve for European stress and as a structural hedge against institutional uncertainty elsewhere.
For the coming days, risks still lean toward gradual CHF strength, particularly versus USD and higher beta currencies, as long as gold holds near records and tariff tensions remain unresolved.
⚖️ JPY – Event risk high with BoJ, but carry still dominates
USDJPY is trading near 158, close to the top of its recent range, even after a modest pullback as some investors trimmed positions ahead of Friday’s BoJ decision and Japan’s political noise.
The BoJ is widely expected to keep its policy rate at 0.75 percent and signal only a gradual, data-dependent hiking path. Japanese yields have risen but still sit well below US and European levels, so the basic carry argument against JPY remains intact.
At the same time, the yen is not behaving like a classic safe haven in this cycle because Japan’s high debt load and changing policy framework make investors cautious about using JPY as their primary hedge.For the rest of the week, JPY risks look two sided: a slightly more hawkish BoJ tone or a deeper equity selloff could produce sharp, possibly short-lived yen strength, but if the central bank sounds patient and global markets stabilize, the pair could drift back toward the recent highs in the 159–160 area that traders are watching.
⚖️ AUD – Riding the weaker dollar, still hostage to global risk
AUDUSD is trading around 0.67–0.675, near the top of its six month range, helped by a softer USD and some resilience in domestic data.
Australia still offers a relatively attractive yield compared with Europe or Japan, and the labour market has held up better than feared, but the currency is highly sensitive to swings in risk appetite and to China headlines. With Friday’s global PMIs and US data still in play, AUD risks for the rest of the week look broadly balanced: there is room to stretch a bit higher if the “Sell America” trade continues and PMIs are decent, but any renewed equity shock would likely see AUD slip back toward the mid 0.66s.
🔻 NZD – Bouncing, but still the higher-beta laggard into CPI
NZDUSD has recovered to around 0.583–0.584 after several days of gains from the low 0.57s, helped by dollar weakness and some short covering.However, on a bigger picture view, the kiwi still looks more vulnerable than the Aussie or some European currencies because the RBNZ is closer to further easing and New Zealand growth is soft.
Thursday’s CPI release is the big local event and will shape how much policy room the RBNZ is seen to have. If inflation undershoots, expectations of rate cuts later in the year will firm, and NZD tends to behave like a high beta play on global risk, which is not ideal when tariffs and equity volatility dominate the tape.
For the rest of this week, risks remain tilted toward NZD underperformance, especially against currencies with stronger external balances or haven characteristics such as CHF and, in sharp risk-off episodes, JPY.
Cross-asset wrap
- 🪙 Gold:
Gold has smashed through 4,800 dollars an ounce and is pressing toward the high 4,800s, its strongest level on record, as investors hedge tariff, debt and institutional risk.The move is being driven by both a softer dollar and a broader search for assets perceived as outside the political firing line. - 🛢 Oil:
Brent is trading around 64 dollars, down about 1 percent on the day, as expectations for higher US inventories and easing supply disruptions in Kazakhstan outweigh any Greenland-related growth concerns for now.Prices are still high enough to matter for headline inflation, but current levels do not fundamentally change the path for major central banks this week. - 📈 Stocks:
US and European equities just logged their worst daily fall since October, with the S&P 500 down a bit over 2 percent and the Nasdaq even more, as tariff fears and de-risking hit growth and tech names hardest.Futures are modestly firmer this morning, suggesting a pause rather than a clear reversal, and Friday’s PMI data will be important in deciding whether this is just a wobble or the start of a more extended risk repricing. - ₿ Crypto:
Bitcoin has dropped from near 95,000 to the high 88,000s, with roughly a 7 percent drawdown tied to the same tariff and risk aversion themes that hit equities, and onchain data show significant liquidations of leveraged long positions.Crypto is behaving as a high beta macro asset here, responding to shifts in growth expectations, dollar liquidity and equity volatility rather than as a consistent “digital haven.”
This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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