🧠Stronger dollar, oil jitters and payrolls risk drive FX
Published: 1/9/2026
Good morning from a wet and wintry IntelliTrade HQ in Amsterdam, traders. The bike paths are slick, the snow warnings are out, so grab a hot coffee and let’s walk through what could be a very lively session.
Overall Market Sentiment
Markets are cautious but not panicked ahead of today’s US payrolls release. The dollar index is hovering around 99 after a three day climb, with the intraday range sitting roughly between 98.8 and 99.1.
US 10 year yields are near 4.18 percent, the S&P 500 is holding above 6,900 and the VIX sits in the mid teens, together pointing to a pre event “hedged but still risk-on” stance rather than full risk-off. Gold is steady to slightly firmer around the 4,470 level and Brent crude trades near 62 dollars, both still reflecting a premium for recent geopolitical shocks.
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Geopolitics
Venezuela and the oil complex remain at the centre of the geopolitical narrative. Supply concerns tied to US control over Venezuelan exports and unrest in Iran have pushed Brent back above 62 dollars and WTI above 58, marking a third straight weekly gain as traders price a higher chance of disruptions.
At the same time, markets still see a sizeable global surplus in the first half of 2026, so energy price moves are being treated as risk premia layered on top of an otherwise comfortable supply picture. That combination is mildly disinflationary for large importers, yet it also keeps a support under gold, which trades just above 4,470 dollars an ounce as investors seek a hedge against both geopolitical risk and an uncertain US policy path.
A separate political risk is building around a forthcoming US Supreme Court ruling on presidential emergency tariff powers, which could matter for global trade, inflation and growth expectations if the decision significantly reshapes how future tariffs can be imposed. For now, markets are treating Brent near 60–63 and gold above 4,400 as the two main geopolitical gauges.
Assumption: There is no immediate, large scale escalation in Venezuela or Iran beyond currently known events during the coming week.
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The week ahead: key macro focus
•US labour market: Today’s nonfarm payrolls are the main event. Consensus has edged up toward roughly 60–70k jobs after a 64k print in November, with unemployment expected around 4.5–4.6 percent. A meaningful beat or miss could quickly reprice the Fed path and the dollar.
•US yields and risk: A stronger jobs report would likely push front end and 10 year yields higher, pressuring gold and higher beta FX. A soft print would do the opposite and might finally break the dollar’s January winning streak.
•Euro area inflation and activity: Flash HICP around 2 percent and slightly better manufacturing data suggest the ECB can stay patient, but any upside surprise in prices would matter for EUR crosses.
With that backdrop, here is how the main currencies line up.
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🔺 USD
The dollar index is clinging to modest daily gains just below 99, up roughly 0.7 percent year to date, as markets brace for a payrolls number that could confirm or challenge the recent “resilient but cooling” labour story. US 10 year yields near 4.18 percent and a curve that is now only slightly positive give the dollar a clear real yield advantage over currencies where inflation is already back to target and policy rates are lower.
Recent US job openings and private payrolls data have cooled, yet not collapsed, which keeps the Fed comfortable holding its 3.5–3.75 percent funds range for now and arguing for just gradual cuts later in 2026. The immediate risk is that a solid NFP print around or above 70k reinforces this view, lifts yields and extends the dollar’s rally, particularly against low yielding currencies like JPY and CHF.
On levels, many desks are watching 98.5 as first support on DXY and 99.5–100 as a near term resistance zone. Given yields, geopolitics and the data calendar, near term risks remain tilted toward a still firm, possibly slightly stronger USD, unless NFP meaningfully underwhelms.
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🔻 EUR
EURUSD is trading in the mid 1.16s, around 1.164–1.166, after drifting lower over the week as the firmer dollar outweighed modestly better eurozone data. Inflation in the bloc is now close to target near 2 percent and survey data hint at a mild manufacturing recovery, which supports the idea of an ECB that cuts later and less aggressively than the Fed, but not soon.
Despite that, the near term story is still dominated by US factors: higher Treasury yields and pre NFP positioning keep EURUSD heavy. If today’s jobs data surprise to the upside, rate differentials can widen again in the dollar’s favour and push the pair closer to the 1.16 handle or below.
Markets broadly see 1.16 as first important support, then the 1.15 region, while 1.18 remains the resistance area that would likely require a weaker dollar and a more upbeat European data mix to challenge. For this week, risks for EUR look skewed toward further softness versus USD, while the single currency can be more resilient on crosses where the local central bank is more dovish than the ECB.
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🔻 GBP
GBPUSD is trading around 1.34, slightly down on the session and near the lower half of its recent range as stronger US data and a cautious UK outlook weigh on sterling. The Bank of England has already cut Bank Rate to 3.75 percent and is signalling that policy is still restrictive but likely past the peak, with markets pricing only modest further easing as long as inflation continues to trend toward 2 percent.
Growth is the soft spot: recent UK activity data have pointed to stagnation rather than expansion, which limits enthusiasm for sterling when global risk appetite wobbles. In the very near term, GBP is primarily a passenger to US data and the dollar leg, with today’s NFP likely to dominate a relatively light domestic calendar.
From a market perspective, 1.34 is now viewed as a key pivot, with 1.33 below as next support and 1.35–1.36 as the resistance band that would likely require a softer USD and friendlier risk tone to retest. Given the current mix, risks lean toward further GBP softness versus USD, while moves versus EUR are more balanced.
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🔻 CAD
USDCAD is sitting close to 1.387, near a one month high for the pair, as persistent dollar strength and only modest support from oil keep the Canadian dollar under pressure. Brent around 62 dollars and WTI near 58 mark a recovery from earlier lows, but the broader narrative is still one of comfortable supply and a potential surplus, especially if Venezuelan barrels continue to find their way into global markets.
The Bank of Canada’s policy rate near 2.25 percent and cautious tone on growth leave little scope for the kind of hawkish surprise that would materially reprice CAD higher, especially with US 10 year yields well above 4 percent and the Fed holding in the mid 3s.
With USDCAD testing resistance around 1.386–1.39, many desks see 1.39–1.40 as the upper reference zone and 1.37 as first support if the dollar cools or oil extends its rebound. For the coming week, risks remain tilted toward a softer CAD against USD, particularly if NFP supports higher yields and a stronger greenback.
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⚖️ CHF
USDCHF trades essentially at 0.80, with the pair hovering between 0.798 and 0.800 as both the dollar and franc draw support from different aspects of the current backdrop. The Swiss National Bank has confirmed a policy rate at 0 percent and inflation near the bottom of its 0–2 percent band, which gives it room to tolerate some franc strength but also means it has little incentive to push CHF much higher if it threatens to export deflation.
Geopolitical uncertainty and elevated gold prices keep CHF attractive as a safe haven, but the short term story is now balanced by the firmer dollar and higher US yields. Against the euro, EURCHF remains relatively stable in the low 0.93–0.94 area, mirroring the fact that both the ECB and SNB are in a long pause.
Overall, the near term risk profile for CHF looks broadly neutral: any spike in risk aversion or fresh geopolitical shock would likely benefit CHF, but if NFP reinforces the US yield advantage, USDCHF can remain supported near current levels rather than trending lower.
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⚖️ JPY
USDJPY is trading around 157.2–157.5, near the top of its recent range, as the dollar’s strength and elevated US yields continue to offset Japan’s gradual policy normalisation. The Bank of Japan has already taken rates out of negative territory and is signalling that further tightening is possible if wage and inflation dynamics stay aligned with its projections, which supports a medium term case for a stronger yen.
In the short run, however, a 10 year US yield above 4 percent and a Fed policy rate in the mid 3s keep carry trades attractive, so JPY tends to weaken whenever risk sentiment is calm and the dollar is firm. Authorities in Tokyo remain sensitive to sharp moves, and traders widely view the 155–160 band as a zone where intervention rhetoric can reappear if volatility spikes.
Into and just after NFP, risks for JPY look mixed: a weaker jobs report and lower yields would favour yen strength, while a strong print could push USDJPY further into the upper half of its 155–160 range before policy or political pressure reasserts itself.
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🔺 AUD
AUDUSD is holding near 0.668–0.670 after a small pullback, still one of the better performers in G10 given the current environment. The Reserve Bank of Australia sits with a 3.6 percent cash rate, inflation still above its 2–3 percent target, and communication that explicitly keeps the door open to further tightening if services prices prove sticky, which leaves Australian yields relatively attractive.
China related indicators have stabilised and commodity prices, including gold and some industrial metals, are not signalling an imminent hard landing, which tends to support AUD on dips. For the week ahead, the main swing factor is US data: a softer dollar on weak NFP plus stable Chinese numbers would keep risks tilted to the upside for AUD, with 0.665 seen as near term support and the high 0.67s as initial resistance.
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🔻 NZD
NZDUSD is trading around 0.573–0.575, close to the lows of its recent range, as a more dovish domestic policy stance and softer growth backdrop weigh on the kiwi relative to AUD and some higher yielding peers. The Reserve Bank of New Zealand has already cut the Official Cash Rate to roughly 2.25 percent, with inflation back inside the 1–3 percent band and activity still below potential, which leaves less policy support than in Australia or the US.
As a result, NZD behaves like a higher beta currency that underperforms when the dollar is strong and risk sentiment is more cautious. For this week, with little local data on the calendar, kiwi is effectively a function of US labour data, China sentiment and cross currents from AUD.
Given that mix, risks remain tilted toward further NZD underperformance, particularly against AUD and USD, unless NFP comes in clearly weaker and triggers a broader dollar correction. Markets view 0.57 on the downside and the 0.585–0.59 region above as the key reference levels near term.
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Cross-asset wrap
•🪙 Gold:
Gold is holding above 4,470 dollars per ounce, up around 0.4 percent on the day, as investors balance profit taking with ongoing demand for a hedge against geopolitical risk and uncertainty over US policy. With real yields still positive but off their peaks and central banks, including the SNB, having benefited from large gold holdings, the metal remains a key portfolio shock absorber rather than just a crisis hedge.
•🛢 Oil:
Brent is trading near 62 dollars and WTI around 58, supported by worries over Venezuelan and Iranian supply even as analysts warn that global oversupply could cap the upside without a significant escalation. For FX, this mix is mildly supportive of petro currencies versus where they would be with crude in the low 50s, but not strong enough yet to fully offset US dollar strength.
•📈 Stocks:
The S&P 500 sits just above 6,920 after recently touching new highs, with the index still range trading below the widely watched 7,000 mark as traders wait for NFP to validate or challenge the “soft landing plus gradual cuts” story. Futures are a touch softer ahead of the data, and a rare recent co move higher in both the S&P and the VIX suggests hedging is building under the surface.
•₿ Crypto:
Bitcoin is fluctuating in the low 90,000s after pulling back from recent highs near the mid 90,000 area, as a firmer dollar and higher real yields temper the early year rebound. Crypto continues to behave as a high beta play on global liquidity and risk sentiment, so today’s payrolls report will likely matter more for the short term direction than token specific stories.