Following the Davos summit and a de-escalation of tensions over Greenland, global markets face an action-packed week. The primary focus remains the Federal Reserve’s interest rate decision. With a rate cut essentially off the table, investor scrutiny will fall squarely on Jerome Powell, particularly in light of recent personal attacks directed at him by the Department of Justice. This week also marks a critical juncture for corporate earnings as the US reporting season reaches its peak. While the macroeconomic calendar is relatively light, investors will be monitoring key data from Japan and the Antipodes. Against this backdrop, USD/JPY, US100, and SILVER are the key markets to watch.
USDJPY
The US dollar has exhibited broad-based weakness recently, weighed down by the geopolitical uncertainty surrounding Greenland. However, Donald Trump’s declaration that he will forgo the use of force in favor of official negotiations has provided some clarity on future US involvement in the region. Despite dollar softness, the USD/JPY pair remains anchored near highs not seen since the 1990s, driven by a sharp spike in Japanese bond yields. For the dollar, Wednesday’s Fed meeting is paramount, specifically the press conference where Powell is expected to continue his unprecedented defense of the central bank’s independence. For the yen, Friday will be the decisive session, with the release of Tokyo-area inflation data and industrial production figures.
US100
Futures on the tech-heavy Nasdaq 100 are currently trading approximately 3% below their all-time highs. We are entering the most consequential week of the earnings season. On Wednesday, following the Fed’s announcement, a trio of “Magnificent Seven” giants: Microsoft, Meta, and Tesla—will report alongside IBM. Thursday shifts the spotlight to Apple. Furthermore, the semiconductor sector will take its cues from Europe on Wednesday morning, when ASML reports its results. Market expectations are exceptionally high; investors are likely to demand significant “beats” against consensus estimates to justify current valuations.
SILVER
Silver continues to set fresh record highs almost daily, fueling market theories regarding a squeeze in physical availability. The metal is mired in a structural deficit, providing a solid fundamental floor for the recent rally. However, near-term volatility will remain tethered to gold, the US dollar, and the shifting geopolitical landscape. While the Greenland situation has cooled, investors remain hyper-vigilant regarding developments in Iran, Venezuela, and Russia. Any further escalation in these theaters could see silver prices establish a permanent foothold above the psychological $100-per-ounce threshold.
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