All that glitters

This market is not whispering anymore. It is flashing fiscal hot alerts in red, white, and blue.

Gold did exactly what strong markets do when fiscal anxiety replaces complacency. It crossed $5100, glanced back at $5000, and found only Asian buyers waiting. Dips were inhaled, not debated. That is not technical behaviour. It is a balance sheet reality asserting itself ahead of the Chinese Lunar New Year, when physical demand collides with fiscal excess, and price turns into levity.

This move is not about macro anxiety. Growth is accelerating, and inflation is easing, creating the virtuous feedback loop for stocks. This is all about fiscal credibility being repriced in real time. When two of the world’s largest economies are running enormous fiscal deficits while sliding into election cycles where fiscal policy will be run scorching hot, fiscal anxiety becomes a tradable asset. Gold does not argue with fiscal policy. It arbitrages it. That is why $5000 is no longer a ceiling. It is a reference point.

What gold is telling you is simple. Trust in paper promises is being discounted. The market is not panicking. It is reallocating. When deficits expand and accountability contracts, capital gravitates toward assets that do not require congressional approval or central bank choreography.

FX, by contrast, has gone quiet today but not calm under the surface.

USDJPY is retracing exactly as expected. Nothing fundamental has changed. The move lower was too fast, too emotional, and largely driven by fast money reacting to intervention headlines rather than proof in the pudding via actual BoJ money-market balance sheet data.

A former colleague in Tokyo who reads BOJ ledgers like a high speed abacus confirms there was no intervention on Friday, which lines up with the Reuters report. What we saw was not a firewall. It was a warning flare.

That distinction matters.

Washington’s silence is not accidental. Ambiguity is the policy tool here. No green light, no red light, just enough uncertainty to slow the tape and shake out leverage without wasting a penny.

That said, the episode does give the market a temporary line in the sand to trade against. Think boundary, or even a hard ceiling.

The question now is not if USDJPY rebounds, it already is, but where that pressure point re-engages intervention chatter.

159 feels like the first reference point.
160 is where the market really starts listening again.

Until something genuinely fundamental shifts, this remains a volatility event, not a yen regime change, at least not yet.

The yen now waits for its next catalyst. A weak 40-year JGB auction on Wednesday would reopen the pressure valve immediately. There is also an upside technical vacuum toward 156.00 in USDJPY that price action is leaning into. This is not a trend reversal. It is decompression.

Wednesday’s 40-year JGB auction is the pressure point. A bloodbath outcome would invite tougher rhetoric or tip the balance toward actual FX intervention if the yen craters in sympathy. JGBs have steadied after last week’s chaotic swings, but the longest-duration paper remains the market’s stress test. Expect local institutional arm-twisting to engineer a passable auction, though that offers no guarantee of calm once the bonds hit the secondary market.

The dollar is no longer on the ropes. After two heavy selling sessions, it is finding its footing. US data remains resilient. EM inflows are a headwind, not a regime change. Seasonals turn supportive in February. Tomorrow’s FOMC is unlikely to offer comfort to dollar bears. A steady hand and a firm tone would be enough to stabilize the greenback and invite a grind higher.

The real risks this week are not rhetorical. Poor Treasury auctions would matter. So would a material earnings disappointment from the Magnificent Seven. That is where confidence could fracture.

The euro remains stubbornly bid. EURUSD has support below and temptation above. Real money appears active, but Europe missed a chance to sell itself as a genuine growth alternative. The ceiling near 1.19 still matters. Too many are leaning into the breakout narrative, and options markets are once again paying up for tails. That usually delays gratification.

My bias remains unchanged. This range holds. I still see the quarter resolving closer to 1.17 than rewarding momentum chasers.

Attention now turns squarely to the Fed. Rates will be held. The message will not be dovish. With data holding up and credibility at stake, this is about signalling independence, not accommodation.

Gold is not screaming crisis. It is floating on fiscal credibility.

FX is not broken. It is waiting.

And markets are quietly reminding policymakers that deficits are not abstract numbers. They are tradable risks.