Dollar weakness keeps Gold bid while tech earnings maintain AI momentum

EU mid-market update: Dollar weakness keeps gold bid while tech earnings maintain AI momentum; Iran tensions persisting; Apple reports tonight.

Notes/observations

- European equities opened mixed-to-higher, with a familiar split between stock-specific earnings moves and the broader macro/FX tape. CAC and FTSE found early support (miners notably), while the DAX lagged sharply on a guidance-driven drawdown in SAP. Risk tone was also helped by a cluster of “less bad / better than feared” prints across sectors, though dispersion was high at the single-name level.

- FX remains the main macro focal point. US dollar is attempting to stabilize after sliding to fresh multi-month lows, but commentary suggests investors are still leaning into USD pessimism via higher hedge ratios on US assets. Treas Sec Bessent reiterated support for a “strong dollar” and pushed back on intervention chatter around the yen, following outsized market attention on Pres Trump’s comments that he wasn’t concerned about the dollar’s decline. Even with a partial retracement, the greenback remains down on the week, keeping precious metals bid and reinforcing broader “USD as less reliable safe haven” narratives.

- Commodities and crypto are being pulled by geopolitics. Oil pushed to its highest since late September on rising Iran risk premia. Gold and silver held near record levels on the weaker-dollar impulse and hedging demand.

- Open-source intelligence (OSINT) shows a massive US military buildup across Europe and the Middle East, with GOLD flight tankers and EA-18G Growler electronic warfare jets moving into Morón AB (Spain) alongside a surge of C-17/C-5 strategic airlifters from the US. The deployment, coordinated with the arrival of the USS Abraham Lincoln strike group and a high-altitude RC-135 Rivet Joint reconnaissance mission, may suggest the US is moving from posturing to "final prep" for potential strikes on Iran. While President Trump has not confirmed a final decision, the scale of this "Armada" reflects a high-intensity readiness state aimed at crippling Iranian command links and signals if a "major intervention" is authorized.

- Rates are feeding into cross-asset positioning. US curve is steepening (front-end easing marginally, long-end firmer), consistent with a Fed that is not rushing additional cuts and a market that’s re-pricing term premia and fiscal/independence risks. In the UK, gilts tracked Treasurys higher in yield post-Fed. Longer duration and credit - including private credit/real estate - continue to be pitched as beneficiaries if cash rollover risk rises and curves steepen further.

- Sweden’s Riksbank held at 1.75% as expected and reiterated a “for some time” stance, while flagging higher uncertainty.

- Earnings are the immediate driver of equity dispersion. In US after-hours tech, Meta beat and guided higher on AI-supported ad momentum while lifting capex tied to its superintelligence push; Microsoft saw Azure growth slow broadly in line but capex came in hotter, weighing the stock; Tesla beat the top line and reiterated robotaxi rollout ambitions (targeting at least nine cities) alongside a disclosed $2B investment into xAI. In Europe, banks (Deutsche Bank, ING, Swedbank, Nordea) and large-cap industrial/healthcare/software names (Roche, SAP, ABB, etc.) drove big index-level moves - ABB surged on its update, while SAP’s 2026 outlook underwhelmed elevated expectations. In the UK, airlines were notable with Wizz and easyJet updates moving stocks, and miners (Glencore, Antofagasta) reported production/guidance with copper-sensitive names outperforming.

- Analysts are speculating that Microsoft’s massive $233B RPO surge could be the result of OpenAI quietly shifting commitments away from Oracle’s debt-heavy infrastructure to the relative safety of Azure. If this theory holds, it signals a major fracture in AI partnerships: it suggests that the "Stargate" era's aggressive leverage may be hitting a wall, forcing a "flight to quality" where only the most liquid hyperscalers can survive the industry's trillion-dollar compute demands.

- Meta has officially committed to a staggering $115B–$135B capex guide for 2026, a massive leap from its $72.2B spend that signals Mark Zuckerberg is doubling down on a "compute-constrained" future ahead of new AI models. To bridge the gap between a dwindling $81.6B cash pile and these trillion-dollar ambitions, Meta is pioneering a "shadow debt" architecture—utilizing the $27.3B Project Beignet SPV and $30B in fresh bond issuances to keep infrastructure liabilities off its primary balance sheet. This pivot exposes Meta’s unique vulnerability: unlike rivals with enterprise cloud engines (IaaS), Zuck is betting the farm on proprietary superintelligence, leaving the company "neck-deep" in off-balance-sheet obligations that only a radical ROI breakthrough can justify.

- Asia closed -0.1% to +1.0%. EU indices -1.2% to +0.6%. US futures +0.1-0.2%. Gold +1.8%, DXY 0.0%; Commodity: Brent +2.0%, WTI +2.1%; Crypto: BTC -1.6%, ETH -2.6%.

Asia

- Singapore Central Bank (MAS) Quarterly Monetary Policy Statement kept its policy steady (as expected) for its 3rd straight pause under the current easing cycle. Maintained width of currency band and level at which it was centered and maintained the slope of S$NEER band.

- New Zealand Dec Trade Balance (NZD): +0.1B v -0.3B prior.

- New Zealand Jan ANZ Business Confidence: 64.1 v 73.6 prior.

- Australia Q4 Export Price Index Q/Q: +3.2% v -0.9% prior; Import Price Index Q/Q: 3.0% v -0.4% prior.

- Philippines Q4 GDP Q/Q: 0.6% v 0.9%e; Y/Y: 3.0% v 3.7%e.

- China Pres Xi met with UK PM Starmer in Beijing.

Americas

- Treasury Sec Bessent: US always has strong US dollar policy; We are absolutely NOT intervening in USD/JPY currently.

- FOMC left Target Range unchanged between 3.50-3.75% (as expected). inflation remained somewhat elevated; omited language on downside risks to employment having risen; Vote to keep policy steady was not unanimous (10-2) as Waller and Miran dissented for 25 bps cut.

- Brazil Central Bank (BCB) left Selic Target Rate unchanged at 15.00% (as expected) for its 5th straight pause current tightening cycle. Decision to keep policy steady was unanimous. Expected to start cutting at next meeting.

- Pres Trump and Sen minority leader Schumer said to move towards possible deal to avert govt shutdown: Deal would see DHS funding split from the package.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.28% at 610.22, FTSE +0.45% at 10,200.50, DAX -1.22% at 24,539.22, CAC-40 +0.48% at 8,105.17, IBEX-35 +0.26% at 17,653.24, FTSE MIB +0.54% at 45,380.50, SMI +0.18% at 13,067.30, S&P 500 Futures +0.28%].

Market Focal Points/Key Themes: European indices open generally higher and remained upbeat through the early part of the session; DAX and tech sector dragged down by disappointing cloud growth at SAP; markets reacting to earnings flow; among better performing sectors are industrials and materials; lagging sectors include technology and telecom; mining subsector outperforming amid surge in metals prices; oil & gas subsector supported amid tensions in the Middle East; Lukoil to sell international assets to Carlyle; focus on US durable goods orders coming out later in the day; earnings expected in the upcoming US session include Visa, Apple, Lockheed Martin and Caterpillar.

Equities

- Consumer discretionary: Remy Cointreau [RCO.FR] +5.5% (earnings), H&M [HMB.SE] -2.5% (earnings; guidance).

- Financials: Deutsche Bank [DBK.DE] -1.5% (earnings; buyback), Lloyds Banking Group [LLOY.UK] +0.5% (earnings).

- Healthcare: Sanofi [SAN.FR] -0.5% (earnings).

- Industrials: ABB [ABBN.CH] +8.5% (earnings).

- Technology: STMicro [STM.FR] +4.5% (earnings; guides above est), SAP [SAP.DE] -12.0% (earnings; cloud backlog).

- Telecom: Nokia [NOKIA.FI] +1.5% (earnings).

Speakers

- Sweden Central Bank Policy Statement reiterated that rate was expected to remain at current level for some time. Krona currency to have declining effect on inflation. Labor market remained weak but clear signs of improvement.

- UK PM Starmer commented from Beijing that made some really good progress on tariffs on whiskey and visa-free travel.

- German Chancellor Merz: EU must urgently close the growth gap to US and China.

- France Fin Min Lescure: Recent FX moves reflect fundamentals.

- Denmark Foreign Min Rasmussen: Had meetings in Washington on Greenland; more optimistic on Greenland compared to a week ago.

- China State Council issuesdwork plan: To strengthen fiscal and financial support for services consumption.

Currencies/fixed income

- USD was steady during the session aid by commentary from Treasury Sec Bessent on Wed. Bessent stressed that US always had strong USD policy.

- USD/JPY drifted higher in the session. Tsy Sec Bessent noted on Wed that the US was not intervening in in the pair at this time.

- EUR/USD holding below the 1.20 handle as various ECB members over the past 24 hours stressed that a higher Euro could invoke ECB to take action.

- Precious metals hit fresh record highs as the EU session began with gold testing $5,600/oz and Silver hitting $120/oz.

- 10-year German Bund yield last at 2.86%, France 10-year Oat at 3.42% and 10-year Gilt yield at 4.56% 10-year Treasury yield: 4.27%; 10-year JGB: 2.24%.

Economic data

- (CH) Swiss Dec Trade Balance (CHF): 3.0B v 3.8B prior; Real Exports M/M: -0.7% v +5.0% prior; Real Imports M/M: -1.3% v +1.7% prior; Watch Exports Y/Y: +3.3% v -7.3% prior.

- (SE) Sweden Q4 GDP Indicator Q/Q: 0.2% v 0.5%e; Y/Y: 1.8% v 2.1%e.

- (SE) Sweden Dec GDP Indicator M/M: -0.6% v +0.5% prior; Y/Y: 0.9% v 2.2% prior.

- (SE) Sweden Dec Household Lending Y/Y: 2.9% v 2.8% prior.

- (NO) Norway Dec Credit Indicator Growth Y/Y: 4.4% v 3.9% prior.

- (FI) Finland Nov Final Trade Balance: -€0.3B v -€0.3B prelim.

- (TR) Turkey Jan Economic Confidence: 99.4 v 99.4 prior.

- (TR) Turkey Dec Unemployment Rate: 7.7% v 8.5%.

- (HU) Hungary Dec PPI M/M: -0.4% v -0.3% prior; Y/Y: -3.4% v -2.7% prior.

- (HU) Hungary Dec Trade Balance: €0.3B v €0.0Be.

- (ES) Spain Dec Adjusted Retail Sales Y/Y: 2.9% v 6.0% prior; Retail Sales (unadj) Y/Y: 4.7% v 3.9% prior.

- (SE) Sweden Jan Consumer Confidence: 95.3 v 97.0e; Manufacturing Confidence: 103.6 v 103.8 prior; Economic Tendency Survey: 103.0 v 103.9e.

- (SE) Sweden Central Bank (Riksbank) left Repo Rate unchanged at 1.75%; as expected) for its 3rd straight pause under the current phase of its easing cycle.

- (EU) Dec M3 Money Supply Y/Y: 2.8% v 3.0%e.

- (IS) Iceland Jan CPI M/M:0.4 % v 1.2% prior; Y/Y:5.2 % v 4.5% prior.

- (PT) Portugal Jan Consumer Confidence: -14.7 v -14.5 prior; Economic Climate Indicator: 3.0 v 3.1 prior.

- (ZA) South Africa Dec PPI M/M: 0.2% v 0.3%e; Y/Y: 2.9% v 3.0%e.

- (EU) Euro Zone Jan Economic Confidence: 99.4 v 97.1e.

- (IT) Italy Nov Industrial Sales M/M: -0.1% v -0.6% prior; Y/Y: 0.0% v 1.7% prior.

- (BE) Belgium Q4 Preliminary GDP Q/Q: 0.2% v 0.3% prior; Y/Y: 1.1% v 1.0% prior.

- (GR) Greece Dec Unemployment Rate: 7.5% v 8.1% prior.

- (GR) Greece Nov Retail Sales Value Y/Y: 0.3% v 4.4% prior; Retail Sales Volume Y/Y: 1.7% v 5.5% prior.

Fixed income issuance

- (UK) DMO sold £1.25B in 0.125% 2028 Gilts via Tender; Avg Yield: 3.443% v 3.783% prior; bid-to-cover: 3.77x v 3.84x prior.

- (IT) Italy Debt Agency (Tesoro) sold total €6.5B vs. €6.0-6.5B indicated range in 5-year and 10-year BTP Bonds.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Apr 2035 Floating Rate Note (CCTeu); Real Yield:2.71% v 2.84% prior; bid-to-cover: 1.65x v 1.42x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Jan CPI M/M: No est v 0.1% prior; Y/Y: No est v 2.1% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (FR) France Q4 Total Jobseekers: No est v 3.046M prior.

- 06:00 (IE) Ireland Q4 Preliminary GDP Q/Q: No est v -0.3% prior; Y/Y: No est v 10.8% prior.

- 06:00 (IT) Italy Dec Hourly Wages M/M: No est v 0.0% prior; Y/Y: No est v 2.6% prior.

- 06:00 (PT) Portugal Dec Retail Sales M/M: No est v -1.1% prior; Y/Y: No est v 1.7% prior.

- 06:00 (BR) Brazil Jan FGV Inflation IGPM M/M: 0.4%e v 0.0% prior; Y/Y: -0.9%e v -1.1% prior.

- 06:00 (RO) Romania to sell combined RON1.7B in 2028 and 2031 bonds.

- 06:30 (BR) Brazil Dec Total Outstanding Loans (BRL): No est v 6.972T prior; M/M: No est v 0.9% prior; Personal Loan Default Rate: No est v 6.3% prior.

- 07:00 (UR) Ukraine Central Bank Interest Rate Decision: Expected to cut Key Rate by 50bps to 15.00%.

- 07:00 (CL) Chile Dec Unemployment Rate: 8.3%e v 8.4% prior.

- 08:00 (ZA) South Africa Central Bank Interest Rate Decision: Expected to leave Interest Rate unchanged at 6.75%.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Jan 23rd: No est v $769.1B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Q3 Final Nonfarm Productivity: 4.9%e v 4.9% prelim; Unit Labor Costs: -1.9%e v -1.9% prelim.

- 08:30 (US) Initial Jobless Claims: 205Ke v 200K prior; Continuing Claims: 1.86Me v 1.849M prior.

- 08:30 (US) Nov Trade Balance: -$44.1Be v -$29.4B prior.

- 08:30 (CA) Canada Nov Int'l Merchandise Trade (CAD): -0.7Be v -0.6B prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:30 (IT) ECB’s Cipollone (Italy).

- 10:00 (US) Nov Factory Orders: +1.6%e v -1.3% prior; Factory Orders (ex-transportation): No est v -0.2% prior.

- 10:00 (US) Nov Final Durable Goods Orders: No est v 5.3% prelim; Durables (ex-transportation): No est v 0.5% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.7% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v0.4 % prelim.

- 10:00 (US) Nov Final Wholesale Inventories M/M: 0.2%e v 0.2% prelim; Wholesale Trade Sales M/M: No est v -0.4% prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 12:30 (BR) Brazil Dec Total Formal Job Creation: -467.9Ke v +85.9K prior.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 16:00 (NZ) New Zealand Jan ANZ Consumer Confidence: No est v 101.5 prior.

- 18:00 (KR) South Korea Dec Industrial Production M/M: 0.5%e v 0.6% prior; Y/Y: -2.0%e v -1.4% prior; Cyclical Leading Index Change: No est v 0.3 prior.

- 18:30 (JP) Japan Jan Tokyo CPI Y/Y: 1.7%e v 2.0% prior; CPI (ex-fresh food) Y/Y: 2.2%e v 2.3% prior; CPI (ex-fresh food/energy) Y/Y: 2.6%e v 2.6% prior.

- 18:30 (JP) Japan Dec Jobless Rate: 2.6%e v 2.6% prior; Job-To-Applicant Ratio: 1.18e v 1.18 prior.

- 18:50 (JP) Japan Dec Retail Sales M/M: -0.5%e v +0.7% prior (revised from 0.6%); Y/Y: 0.7%e v 1.1% prior (revised from 1.0%); ; Dept. Store, Supermarket Sales Y/Y: No est v 3.2% prior.

- 18:50 (JP) Japan Dec Preliminary Industrial Production M/M: -0.4%e v -2.7% prior; Y/Y: +2.1%e v -2.2% prior.

- 19:01 (UK) Jan Lloyds Business Barometer: 50e v 47 prior; Own Price Expectations: No est v 59 prior.

- 19:30 (AU) Australia Q4 PPI Q/Q: No est v 1.0% prior; Y/Y: No est v 3.5% prior.

- 19:30 (AU) Australia Dec Private Sector Credit M/M: 0.6%e v 0.6% prior; Y/Y: No est v 7.4% prior.

- 19:30 (SG) Singapore Q4 Final URA Private Home Prices Q/Q: No est v 0.7% prelim.

- 19:00 (AU) Australia to sell A$1.0B in 4.25% 2036 Bonds.

- 21:00 (SG) Singapore Dec M2 Money Supply Y/Y: No est v 5.7% prior; M1 Money Supply Y/Y: No est v 10.1% prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:35 (JP) Japan to sell 2-year JGB Bonds.