• Will not comment on forex levels
• But will take appropriate action if needed
• Still examining source of revenues to fund consumption tax cut
• Have to be mindful of movements in forex, interest rates in considering revenues to fund consumption tax cut
• Will keep an eye out on speculative forex moves, ready to take necessary action

Earlier, she also commented that she will “ensure sustainability of Japan’s fiscal state by lowering the debt-to-GDP ratio”. That will be tough considering how expansive her fiscal policies are and that is already the main reason why the Japanese yen has been battered for months on end since October.

The Takaichi trade summarised:

As she now calls for a snap election, will it be a case of buy the rumour, sell the fact as outlined here?

It will be interesting to see if this really backfires on Takaichi. But if that were to happen, expect yen shorts to be covered in a massive manner.

For now though, traders remain confident that things will not change in terms of policy heading for Japan. USD/JPY is down 0.1% to 157.93 today and continues to keep around the 158.00 level after a brief dip to 157.42 earlier in the day amid some safety flows.

This article was written by Justin Low at investinglive.com.

IC Markets Global – Asia Fundamental Forecast | 19 January 2026

What happened in the U.S. session?

President Trump’s tariff threats on Europe over Greenland dominated overnight headlines, absent major U.S. data, fostering caution in futures trading while propelling gold higher; European stocks and U.S. indices faced the sharpest impacts, with safe-havens like gold rallying amid trade war fears.

What does it mean for the Asia Session?

Asian markets open Monday amid optimism from U.S.-Taiwan chip investments and metals rallies, but focus sharpens on China’s Loan Prime Rate for policy clues and UK jobs data for GBP effects, with oil and gold volatility adding layers to trading decisions. Position cautiously for data-driven moves.

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The US dollar showed resilience, with the DXY index holding steady around 99.39 amid thin trading due to Martin Luther King Jr. Day closures in US markets. Strong recent economic data, including lower-than-expected jobless claims and positive manufacturing surveys, reduced expectations for near-term Federal Reserve rate cuts, supporting the currency’s third weekly gain

Central Bank Notes:

• The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
• Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
• Economic activity grew at a 3.8% annualized pace in Q2 2025 per revised estimates, though Q3 and Q4 face headwinds from trade tensions, fiscal restraint, and data disruptions like the government shutdown.
• September’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signaling a gradual disinflation path. Updates expected on December 10 may adjust for higher unemployment and lower growth.
• The Committee maintained its data-dependent approach, noting a softening labor market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.​
• The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
• The next meeting is scheduled for 27 to 28 January 2026.

Next 24 Hours Bias

Medium Bearish 

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold (XAU/USD) ended last week near $4,618 in a bullish channel but eyes consolidation between $4,550-$4,650 this week (Jan 19-23), with potential rises to $5,235 if supports hold, or declines below $3,785 on breakdowns; key watch is $4,586 for bullish bias.

Next 24 Hours Bias
Strong Bullish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian Dollar trades steadily around 0.6700 versus the USD, rebounding from recent corrections driven by softer domestic data like falling consumer confidence and job ads, offset by USD struggles amid US Fed investigations and political risks.

​
Central Bank Notes:

• The Reserve Bank of Australia held its cash rate steady at 3.60% at the November 2025 policy meeting, adopting a cautious tone amid a surprise uptick in inflation data for the September quarter. This marks the fourth consecutive pause since the 25 basis point cut in August. The Board attributed some of the inflation rise to temporary factors like higher petrol prices and council rates, but noted signs of more persistent pressures from consumer demand.​
• Policymakers emphasized vigilance on inflation, with trimmed mean inflation expected to remain elevated in the near term before nearing the 2–3% target midpoint by mid-2027. Recent data showed underlying inflation staying above target until at least the second half of 2026, prompting upward revisions to forecasts. Capacity pressures are seen as slightly more pronounced than previously assessed, delaying any easing.
• Headline CPI for the September quarter exceeded expectations, driven partly by temporary items, while underlying measures signal ongoing stickiness. The shift to monthly CPI reporting, with the first full edition in November 2025, will enhance real-time inflation monitoring. Housing and services remain resilient contributors to price pressures.
• Domestic demand shows firmness in services alongside below-trend growth elsewhere, with capacity pressures not expected to ease significantly. The labor market is gradually softening, with unemployment projected to stabilize around 4.4%, though wage growth and productivity dynamics keep unit labor costs a concern. Household spending faces headwinds from high borrowing costs.​
• Global risks include geopolitical tensions and commodity volatility, set against modestly revised-up world growth outlooks. The Board describes its policy as mildly restrictive and data-dependent, balancing inflation control with employment goals. No rate hike was considered despite the inflation surprise.
• Monetary policy remains mildly restrictive to address lingering price stability risks amid household and global vulnerabilities. Communications reaffirm the dual mandate of 2–3% inflation and full employment, with readiness to adjust based on incoming data.​
• Market expectations point to the cash rate holding through early 2026, with a possible modest cut to 3.3% mid-year if inflation eases as forecast. The new monthly CPI data will be key for timely insights.
• Monetary policy remains mildly restrictive, balancing progress on price stability against vulnerabilities in household demand and global outlook. Board communications reaffirm a dual mandate: price stability and full employment, while underscoring readiness to respond should risks materialize sharply.
• Analysts generally expect the cash rate to remain at current levels through early 2026, with only modest cuts possible later in the year if inflation moderates. The new monthly CPI release (first full edition Nov 2025) will be watched closely for timely signals on price trends.
• The next meeting is on 2 to 3 February 2026.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from NZD today?

The New Zealand Dollar (NZD) showed modest fluctuations around the 0.5740-0.5780 range against the USD in recent trading sessions leading into January 19, 2026, amid mixed economic signals from New Zealand and broader USD pressures. Positive domestic data, including strong December manufacturing PMI growth for the sixth straight month and rising business confidence, supported a weekly gain toward 0.5750.

Central Bank Notes:

• The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 26 November 2025 meeting, following the widely anticipated 25-basis-point reduction from 2.50%, and signaled that policy is now firmly in stimulatory territory while keeping the option of further easing on the table if needed.
• The decision was again reached by consensus, with members judging that the cumulative 325 basis points of easing over the past year warranted a period of assessment, even as several emphasized a willingness to cut further should incoming data point to a more protracted downturn or renewed disinflationary pressures.
• Headline consumer price inflation is projected to hover near 3% in late 2025 before gradually easing toward the 2% midpoint of the 1–3% target band through 2026, supported by contained inflation expectations around 2.3% over the two-year horizon and an expected pickup in spare capacity.
• The MPC noted that domestic demand remains subdued but shows tentative signs of stabilisation, with softer household spending and construction only partially offset by improving services activity; nevertheless, policymakers still expect services inflation to ease as wage growth moderates and the labour market loosens further over the coming year.
• Financial conditions continue to ease as wholesale and retail borrowing rates reprice to the lower OCR, contributing to gradually rising mortgage approvals and improving housing-related sentiment, although broader business credit growth remains patchy and sensitive to uncertainty about the durability of the recovery.
• Recent data confirm that GDP momentum is weak but not deteriorating as sharply as earlier in 2025, with high-frequency indicators pointing to a shallow recovery from a low base and ongoing headwinds from elevated living costs and fragile confidence weighing on discretionary consumption and investment.
• The MPC reiterated that external risks remain skewed to the downside, particularly from softer Chinese demand and uncertainty around United States trade policy, but noted that a lower New Zealand dollar continues to provide some offset via improved export competitiveness and support for tradables inflation.
• Looking ahead to early 2026, the Committee maintained a mild easing bias, indicating that a further cut toward 2.00–2.10% cannot be ruled out if activity fails to gain traction or if inflation undershoots projections, but current forecasts envisage the OCR remaining near 2.25% for an extended period, provided inflation converges toward target and the recovery proceeds broadly as expected.
• The next meeting is on 18 February 2026.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The Japanese Yen faced continued pressure on Monday, trading around the USD/JPY level of approximately 158 amid heightened volatility driven by Bank of Japan (BoJ) policy expectations and intervention risks. Verbal warnings from Japan’s Finance Minister Satsuki Katayama underscored concerns over excessive yen weakness

Central Bank Notes:

• The Policy Board of the Bank of Japan will meet on 18–19 December with markets almost fully pricing a 25-basis-point hike, which would raise the short-term policy rate from 0.50% to around 0.75%, as the bank moves further away from its ultra-loose stance while stressing that any tightening will remain gradual and data-dependent.
• The BOJ is expected to continue guiding the uncollateralized overnight call rate in a narrow band around the new policy rate, near 0.75%, while signaling that the pace and timing of any additional hikes will depend on how past increases affect bank lending, corporate financing conditions, and overall economic activity.
• The quarterly path of JGB purchases remains on a pre-announced, gradual taper: outright purchases are being reduced by about ¥400 billion per quarter through March 2026, then by roughly ¥200 billion per quarter from April to June 2026, with the bank still aiming for JGB purchases to settle near ¥2 trillion in Q1 2027 and retaining flexibility to adjust the pace if market functioning or yield volatility deteriorate.
• Japan’s economy has softened in the near term, with Q3 2025 GDP contracting at an annualized rate of approximately 2.3%, as weaker residential investment and external demand weighed on activity. Meanwhile, business sentiment in manufacturing has recently improved to a roughly four-year high.
• Core consumer inflation (excluding fresh food) accelerated to around 3.0% year-on-year in October, up from 2.9% in September and remaining above the BOJ’s 2% target, while the “core-core” measure excluding both fresh food and energy rose to about 3.1%, underscoring persistent underlying price pressures.
• In the very near term, some input-cost pressures are easing as earlier import price surges fade, but services inflation linked to labor shortages, along with steady wage gains, continues to support broader price momentum; firms’ and households’ medium-term inflation expectations remain anchored slightly above 2%, keeping short-term inflation risks tilted to the upside.
• For the coming quarters, the BOJ assesses that real growth will likely run below potential as the economy digests tighter financial conditions and past yen depreciation. However, accommodative real rates, positive real wage growth, and improving corporate sentiment are expected to help sustain a modest recovery in private consumption and business investment.
• Over the medium term, as overseas demand stabilizes and domestic labor markets remain tight, the BOJ expects wage settlements and inflation expectations to keep core inflation on a gradual upward trajectory around or slightly above 2%, providing room for further cautious rate normalization as long as financial conditions remain supportive and the recovery is not derailed.
• The next meeting is scheduled for 22 to 23 January 2026.

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Oil markets show continued volatility driven by geopolitical tensions in Iran, ongoing protests since late December 2025, and US President Donald Trump’s recent announcement of 25% tariffs on goods from countries trading with Iran, which briefly pushed Brent crude above $66 per barrel before a pullback.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global – Asia Fundamental Forecast | 19 January 2026 first appeared on IC Markets | Official Blog.

It looks like it could be a very busy week ahead for traders, with plenty of geopolitical updates likely, as well as key data releases, central bank updates, and earnings reports.
Traders are expecting to see some moves on the Monday open after President Trump threatened several countries, including France, the UK, and Sweden, with tariffs of up to 25% if they go ahead with military exercises in Greenland.

Here is our usual day-by-day breakdown of the major risk events this week:

It is a quiet calendar start to the week on Monday, with little on the schedule for the first two sessions of the day. US markets are closed for Martin Luther King Jr Day; however, there will be a focus on Canadian markets on the North American open when key CPI data is released, as well as the Bank of Canada Business Outlook Survey.

It is a slightly busier day on Tuesday. The initial focus in the Asian session will be on Chinese markets, with key Loan Prime Rate updates due midway through the session. UK markets will feature early in the European session, with employment data due out before Bank of England Governor Andrew Bailey testifies before the Treasury Select Committee. We also hear from SNB Chairman Martin Schlegel and Buba President Joachim Nagel when they speak from the World Economic Forum in Davos.

It is a quiet start again to the day in Asia; however, UK markets again feature in the European session, with CPI data due out. The focus swings to Davos again, where we are scheduled to hear from ECB President Christine Lagarde and US President Donald Trump.

Australian markets will be the early focus for Asia-based traders on Thursday, with employment data due out during the Sydney morning. There is little on the agenda in the London session; however, the New York day will see two key US data updates, with the Core PCE Price Index data due out alongside the latest GDP update.

The Asian session should prove to be busy on Friday, with New Zealand CPI data due out early in the day before focus moves north to Japan for the latest rate decision from the Bank of Japan. There is a raft of flash Manufacturing and Services PMI data due out in the London session, while the New York day sees Canadian retail sales numbers, the US PMI data, and the revised University of Michigan Consumer Sentiment update.

The post The Week Ahead – Week Commencing 19th January 2026 first appeared on IC Markets | Official Blog.

DXY (U.S. Dollar Index):

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 98.74

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 97.64

Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential area where the price could again stabilize.

1st resistance: 100.25
Supporting reasons: Identified as a multi-swig high resistance, indicating a potential area that could halt any further upward movement

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

The price has already reacted off the pivot and may continue its bearish move toward the 1st support. 

Pivot: 1.1623

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 1.1478

Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once again.

1st resistance: 1.1790

Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

EUR/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance. 

Pivot: 181.62

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 178.27
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could again stabilize.

1st resistance: 185.57
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

EUR/GBP: 

Potential Direction: Bearish
Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 0.8712

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 0.8607
Supporting reasons: Identified as an overlap support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8969
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance. 

Pivot: 1.3296

Supporting reasons: Identified as a pullback support that aligns with the 50% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 1.3188
Supporting reasons: Identified as an overlap support, indicating a potential area where the price could stabilize once more.

1st resistance: 1.3545
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could halt further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 210.28

Supporting reasons: Identified as a multi-swing low support, where renewed buying pressure could emerge to push the price higher.

1st support: 208.94
Supporting reasons: Identified as a pullback support, indicating a potential level where the price could stabilize once more.

1st resistance: 213.60
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could halt further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 0.7959

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 0.7855
Supporting reasons: Identified as a multi-swing low support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.8104
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 156.95

Supporting reasons: Identified as a pullback support that aligns with the 50% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 154.80

Supporting reasons: Identified as an overlap support, indicating a strong area where buyers might return, and the price could stabilize once again.

1st resistance: 159.16

Supporting reasons: Identified as a swing high resistance. This level represents the next key area where upward movement could be capped amid increased selling pressure

USD/CAD:

Potential Direction: Bearish                                                                                                                                                                                             

Overall momentum of the chart: Bearish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 1.3933

Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 1.3796

Supporting reasons: Identified as a pullback support, indicating a key level where the price could stabilize once more.

1st resistance: 1.4060

Supporting reasons: Identified as a pullback resistance, making it a possible target for bullish advances and a level where some sellers could return to cap gains

AUD/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 0.6675

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 0.6589

Supporting reasons: Identified as a pullback support that aligns with the 50% Fibonacci retracement, this area has provided strong support historically and may attract buying interest for a potential short-term bounce

1st resistance: 0.6766

Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 0.5682

Supporting reasons: Identified as a pullback support that aligns with the 61.8% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 0.5584

Supporting reasons: Identified as a swing low support, this area has provided strong support historically and may attract buying interest for a potential short-term bounce

1st resistance: 0.5838

Supporting reasons: Identified as an overlap resistance that aligns with the 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 48,827.16

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 47,713.62

Supporting reasons: Identified as an overlap support, suggesting a potential area where the price could stabilize once again.

1st resistance: 50,079.89

Supporting reasons: Identified as a resistance that is supported by the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 24,626.60

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 23,886.70

Supporting reasons: Identified as an overlap support, indicating a key level where the price could stabilize once more.

1st resistance: 25,911.80

Supporting reasons: Identified as a resistance that is supported by the 161.8%% Fibonacci extension and the 127.2% Fibonacci projection, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 6,755.80

Supporting reasons: Identified as an overlap support that aligns with the 50% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 6,509.00

Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once again.

1st resistance: 6,978.40

Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 92,972.95

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 84,280.72

Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once more.

1st resistance: 106,899.10

Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 3,390.47

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 2,725.92

Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 3,838.62
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 58.58

Supporting reasons: Identified as an overlap support, where renewed buying pressure could emerge to push the price higher.

1st support: 55.13
Supporting reasons: Identified as a swing low support, indicating a key level where the price could stabilize once more.

1st resistance: 62.26
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could make a short-term pullback toward the pivot before rising again toward the 1st resistance 

Pivot: 4,499.51

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 4,364.78
Supporting reasons: Identified as a pullback support, indicating a key level where the price could stabilize once more.

1st resistance: 4,690.21
Supporting reasons: Identified as a swing high resistance that aligns with the 61.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

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The post Monday 19th January 2026 : Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Global – Europe Fundamental Forecast | 19 January 2026

What happened in the Asia session?
The Asia session reflected subdued trading with China’s data print meeting lowering expectations but underscoring structural challenges, compounded by Trump’s tariff rhetoric that drove haven flows into gold, JPY, and bonds while pressuring equities and oil. Regional indices like Nikkei and ASX showed limited moves, with focus shifting to BOJ commentary and upcoming PBOC decisions. 

What does it mean for the Europe & US sessions?
Volatility from U.S. tariff threats and mixed bank earnings. President Trump’s announcement of up to 10% tariffs on eight European countries (rising to 25% in June unless a deal on Greenland purchase is reached) has pressured S&P 500 futures down 0.8%, financial stocks, and European indices like BASF, while boosting natural gas prices over 10% on weather concerns.

The Dollar Index (DXY)

Key news events today

No major news event

What can we expect from DXY today?

The dollar traded tentatively lower early in the session as markets digested Trump’s tariff escalations, boosting safe havens and pressuring the greenback against major peers amid broader caution on US fiscal and trade policies, yet it held steady overall on the DXY near 99 amid light volumes. Upcoming US data like payrolls and PMIs, plus a potential Fed chair announcement, loom as pivotal for the week.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labour market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
• Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
• Economic activity grew at a 3.8% annualised pace in Q2 2025, according to revised estimates. However, Q3 and Q4 are expected to face headwinds from trade tensions, fiscal restraint, and data disruptions, such as the government shutdown.
• September’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signalling a gradual disinflation path. Updates expected on December 10 may adjust for higher unemployment and lower growth.
• The Committee maintained its data-dependent approach, noting a softening labour market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.​
• The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
• The next meeting is scheduled for  27 to 28 January 2026.

Next 24 Hours Bias
Strong Bullish

Gold (XAU)

Key news events today

No major news event

What can we expect from Gold today?

Gold prices surged to record highs on January 19, 2026, driven by safe-haven demand amid escalating US trade tensions, including President Trump’s tariffs on Greenland and broader US-Europe frictions. Spot gold climbed around 1.6-2% to approximately $4,668-$4,690 per ounce in early Asian and Singapore trading

Next 24 Hours Bias   
Strong Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

Geopolitical risks, including Trump’s tariff rhetoric nullifying trade assumptions, overshadow Eurozone recovery narratives like Germany’s data progress, prompting risk recalibration. Meanwhile, Bulgaria’s euro adoption earlier this month marks ongoing EU integration, though only six EU states remain outside the currency union

Central Bank Notes:

• The Governing Council of the ECB kept the three key interest rates unchanged at its 4–5 January 2026 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40% and the deposit facility at 2.00%. This decision aligns with the assessment that the current stance supports medium-term price stability, as inflation edges below the 2% target while growth shows resilience amid balanced risks. Markets and commentary indicate value in holding steady, with no fixed path ahead given uncertainties in data.
• Price dynamics remain stable near target levels. Headline HICP inflation stood at 2.1% in November 2025, with projections for 1.9% in 2026 driven by base effects from energy and easing non-energy components. Services inflation persists somewhat elevated but trends toward moderation, alongside contained food pressures.
• December 2025 Eurosystem staff projections confirm headline inflation at 2.1% for 2025, declining to 1.9% in 2026 and 1.8% in 2027 before nearing 2% in 2028. Downside risks from soft producer prices and anchored expectations offset potential upsides from geopolitics or fiscal measures.
• Euro area GDP growth remains resilient at subdued levels, with Q3 2025 at 0.3% qoq and forecasts around 1.2-1.4% for 2025-2027. Surveys signal stabilization, bolstered by public investment and external demand against softer private spending.
• The labour market stays tight overall, with unemployment steady at 6.4% through October 2025, near historic lows and solid participation. Real incomes support consumption as inflation eases, with credit conditions aiding gradual household and firm expansion.
• Business sentiment reflects caution over US policy, trade tensions, and tariffs, tempered by easing supply chains and a competitive euro. Export sectors gain a modest lift, while domestic drivers like investment build momentum.
• The Governing Council will continue to make data-dependent decisions meeting by meeting, assessing inflation outlook, underlying trends, and transmission. Both hikes and cuts remain possible based on data, avoiding preset paths amid uncertainties.
• Balance sheet normalisation proceeds steadily, with APP and PEPP portfolios shrinking post-reinvestment halts, at a pace deemed suitable without market strain.

​The next meeting is on 4 to 5 February 2026

Next 24 Hours Bias
Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news event

What can we expect from CHF today?

The Swiss Franc continues to benefit from safe-haven flows, with USD/CHF dipping below 0.8000 to 0.7995 amid Dollar weakness driven by Trump’s tariff rhetoric and subdued US data momentum, while the SNB’s dovish stance at 0% rates underscores CHF’s relative stability in a risk-off environment.

Central Bank Notes:

• At its 11 December 2025 monetary policy assessment, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, extending the pause that began in September as the Governing Board judges that current settings are sufficient to keep inflation near, but still below, its target while avoiding an unnecessary move into negative rates.
• Recent data show that the tentative rebound in Swiss inflation has stalled, with headline CPI easing from 0.1% year‑on‑year in October to 0.0% in November and core inflation slipping to about 0.4%, reinforcing the view that underlying price pressures remain very weak and that deflation risks, while contained, have not fully disappeared.
• The SNB’s conditional inflation forecast is likely to remain close to the September projections, with inflation still seen averaging roughly 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027 under an unchanged policy rate path, though the latest CPI prints argue for a slightly lower near‑term profile and keep open the option of renewed easing if activity or prices weaken further.
• The global backdrop has deteriorated further, as continuing U.S. tariff actions and softer external demand weigh on world trade, while uncertainty in key European and U.S. markets for Swiss exports persists, leaving the SNB cautious about the growth outlook despite Switzerland’s relatively resilient domestic demand.
• Business and labour-market sentiment in export‑oriented manufacturing remains subdued, with firms reporting pressure on margins from the still‑strong franc and softer foreign orders, although the broader economy is still expected to grow at around 1–1.5% in 2025 and unemployment only drifting up gradually from low levels.
• The SNB continues to stress its willingness to act if deflation risks re‑emerge, reiterating that it can ease policy through renewed rate cuts or targeted foreign‑exchange intervention if necessary, while also highlighting its commitment to transparent communication, including the publication of detailed minutes from recent assessments and ongoing dialogue with international partners on FX policy

The next meeting is on 19 March 2026.

Next 24 Hours Bias
Strong Bullish

The Pound (GBP)

Key news events today

BOE Gov Bailey Speaks (10:00 am GMT)

What can we expect from GBP today?

The British Pound remains under pressure against the US Dollar, hovering near 1.3378 after a 0.02-0.61% monthly weakening, as weekly forecasts predict a brief bullish test at 1.3545 followed by declines toward 1.2845 amid USD strength from Trump’s tariff rhetoric and low market volumes; no significant UK events today sustain the cautious sentiment, with GBP/USD‘s path tied to euro dynamics and potential Fed concerns.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) will meet on 18 December 2025, with the current Bank Rate standing at 4.00 per cent after being held in a close 5–4 vote at the 5 November meeting. Market pricing and analyst commentary point to a high risk of a 25‑basis‑point cut to 3.75 per cent, but this remains conditional on incoming inflation and labour‑market data, so the December note should be treated as pre‑decision guidance rather than an ex‑post summary.
• The BoE is expected to leave its quantitative tightening (QT) framework broadly unchanged through year‑end, maintaining the lower reduction pace in gilt holdings that was set earlier in 2025. Official communications still characterise the existing QT path as consistent with a restrictive stance, with policymakers stressing that balance‑sheet reduction will remain gradual and sensitive to market‑liquidity conditions.
• Headline CPI inflation eased to 3.6 per cent year‑on‑year in October 2025, down from 3.8 per cent in September, helped by softer energy and goods prices, though it remains almost twice the 2 per cent target. Underlying inflation pressures, particularly in services, have continued to moderate only slowly, so the MPC’s central projection still envisages inflation moving closer to, but not yet reaching, 3 per cent over the course of 2026, contingent on further normalisation in energy and wage dynamics.
• UK economic activity remains weak heading into the December meeting, with the labour market showing further signs of slackening. The unemployment rate has risen toward just above 5 per cent on the latest three‑month figures to October, while overall regular pay growth has slowed to around the mid‑4 per cent range, reinforcing the view that domestic cost pressures are gradually easing.
• External conditions continue to cloud the outlook, with fragile global growth and fluctuating commodity prices contributing to bouts of financial‑market volatility. The MPC has highlighted that renewed global energy or food price shocks could temporarily slow the pace of disinflation, but such risks are currently judged unlikely to derail the medium‑term downward trajectory for inflation if domestic demand stays subdued.
• The balance of risks around the inflation outlook remains finely poised. Downside risks are linked to persistently weak domestic demand and rising unemployment, while upside risks come from still‑elevated inflation expectations, sticky services inflation, and the possibility that structural changes in the labour market leave less slack than conventional indicators suggest.
• Overall, the MPC’s stance going into December is restrictive but increasingly open to a gradual easing cycle, with any rate cuts expected to be measured and data‑dependent. Policymakers have reiterated that the Bank Rate will need to stay in restrictive territory until they are confident inflation is on a sustainable path back to the 2 per cent target, and they have signalled that the profile of cuts, once started, is likely to be shallow rather than rapid.
• The next meeting is on 5 February 2026.

  Next 24 Hours Bias
  Medium Bullish

The Canadian Dollar (CAD)

Key news events today

CPI m/m (1:30 pm GMT)

Median CPI y/y (1:30 pm GMT)

Trimmed CPI y/y (1:30 pm GMT)

Common CPI y/y (1:30 pm GMT)

BOC Business Outlook Survey (3:30 pm GMT)

What can we expect from CAD today?

The Canadian Dollar faced continued headwinds, trading near six-week lows around USD/CAD 1.3915 as USD firmness, bolstered by strong US jobs data and cautious Fed outlook, offset domestic positives, while lower oil prices and a fresh Canada-China trade deal eroded commodity support; upcoming CPI and retail sales figures could dictate if the loonie stabilizes or extends its monthly 0.90% weakening trend.
​
Central Bank Notes:

• The Governing Council left the target for the overnight rate unchanged at 2.25% at its 10 December 2025 meeting, in line with market expectations and signalling that the earlier easing cycle has likely concluded. The Bank noted that while global tariff tensions and trade uncertainty persist, the external backdrop has stabilised somewhat, reducing the need for additional insurance cuts even as world trade remains fragile.
• The Council acknowledged that uncertainty around U.S. trade policy and tariffs continues to weigh on business sentiment, but recent data show Canadian manufacturing and goods exports holding up better than anticipated. Surveys cited by the Bank suggest export order books have stopped deteriorating, with firms reporting some rebuilding of backlogs despite still‑cautious capital spending plans.
• Canada’s economy rebounded more strongly than expected in the third quarter, with real GDP expanding at an annualised pace of about 2.6% after a 1.8% contraction in Q2, largely on the back of higher crude exports and government spending. Monthly data show output rising 0.2% in September, though flash estimates point to a softer start to Q4 as some sectors give back earlier gains.
• Service sector activity has firmed, with indicators showing the services PMI back above the 50 threshold and broadening gains in business and professional services. However, consumer-facing categories remain mixed, as still‑elevated price levels and only modest real income growth keep a lid on discretionary spending even as tourism and technology‑related services expand.
• Housing markets have continued to stabilise, with national resale activity and prices edging higher through the autumn alongside the earlier decline in borrowing costs. The Bank noted that while some major urban centres are seeing renewed price pressures, tighter underwriting standards and still‑high affordability constraints are expected to cap the pace of any rebound.
• Headline CPI inflation eased to 2.2% year over year in October and is estimated to have remained near that rate in November, keeping it slightly above the 2% target but comfortably within the 1%–3% control range. Core measures have drifted lower, with CPI‑median and CPI‑trim around 3% or below, reinforcing the assessment that underlying price pressures are gradually moderating even as gasoline and some shelter components remain volatile.
• The Governing Council reiterated that the current policy rate is “about the right level” to keep inflation close to target while supporting the economy through a period of structural adjustment, and it signalled a shift away from near‑term easing expectations. While the Bank did not rule out future adjustments, officials stressed that, barring a material downside surprise to growth or inflation, further rate cuts are unlikely before 2026. Attention is now focused on the durability of the recovery and the evolution of core inflation.
• The next meeting is on 28 January 2026.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

No major news event

What can we expect from Oil today?

Global oil markets face persistent oversupply projected through mid-2026, offsetting uncertainties in Iran and Venezuela, with Brent and WTI reversing early losses on high trading volumes last week. Refinery margins remain decent for January, supported by futures, though gasoline stockpiles rise seasonally. No major new escalations over the weekend kept trading calm, but volatility persists on options markets.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global- Europe Fundamental Forecast | 19 January 2026 first appeared on IC Markets | Official Blog.

US Stocks Drift Lower to Close out the Week – Dow off 0.2%

US equity markets edged modestly lower on Friday, with investors adopting a cautious tone ahead of a busy earnings calendar in the week ahead. The Dow Jones slipped 0.17% to close at 49,359, while the S&P 500 eased 0.06% to 6,940 and the Nasdaq also fell 0.06% to finish at 23,515. Bond markets saw yields move higher across the curve, with the 2-year Treasury yield rising 2.2 basis points to 3.586% and the 10-year yield climbing 5.3 basis points to 4.223%. The move supported the greenback, with the DXY index gaining 0.05% to 99.38. In commodities, oil prices pushed higher once again as ongoing supply concerns continued to underpin the market. Brent crude rose 0.58% to $64.13 a barrel, while WTI added 0.42% to settle at $59.44. Gold slipped back from record highs, falling 0.43% to $4,596.09 as higher yields weighed on the precious metal.

Geopolitics Set to Dominate Start of Trading Week Again
Traders are bracing for a volatile start to the week as markets digest fresh tariff threats from President Trump. The President warned of potential trade measures against European nations should they interfere with his plans regarding Greenland, raising the risk of heightened geopolitical and trade-related volatility as headlines cross the wires. The market reaction has been relatively limited so far, with little gapping on the Monday open. However, traders and investors alike are preparing for more updates in the days ahead, and if it does look like the tariffs – 10% from February 1 and 25% from June 1 – are going to be implemented, then risk trades and respective currencies are likely to take strong hits. The market is erring on the side of caution at the moment, as we have seen some threats pulled by Trump in the past. However, traders are preparing to ‘hit the sell button’ if the issue escalates.

Quiet Calendar Start to a Busy Trading Week
It’s set to be a relatively quiet start on the macroeconomic calendar to the trading week today. However, there is a full schedule of key data releases, earnings reports and central bank updates that should promote volatility as we move through the week. The Asian session has little on the cards today, and the market has so far ridden the Greenland issue relatively unscathed this morning. The London session also has very little to move the dial. However, there are some key data releases scheduled once North America comes in. US markets are on holiday today, which could see some exacerbated moves if risk products start to take a hit. However, the main focus for the day will be on Canadian markets, with key CPI data due out. The headline month-on-month number is expected to show a 0.4% decrease, while both the year-on-year Median and Trimmed CPI numbers are expected to drift down to 2.7%. Later in the day, we also have the Bank of Canada Business Outlook Survey due out, which could also see some reaction in the Loony and other Canadian products.

Explore all upcoming market events in the Economic Calendar.

The post General Market Analysis – 19/01/26 first appeared on IC Markets | Official Blog.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.91%, Shanghai Composite up 0.1%, Hang Seng down 1.03% ASX down 0.44%
• Commodities : Gold at $4,667.05 (1.52%), Silver at $93.242 (5.50%), Brent Oil at $64.21 (0.12%), WTI Oil at $59.47 (0.16%)
• Rates : US 10-year yield at 4.240, UK 10-year yield at 4.4010, Germany 10-year yield at 2.8382

News & Data:

• (USD) Industrial Production m/m  0.4% to 0.1% expected

Markets Update:

Asian stock markets are trading mostly lower on Monday, tracking broadly negative cues from Wall Street at the end of last week, as uncertainty over the future path of interest rates weighs on investor sentiment. Caution has increased amid ambiguity surrounding the US Federal Reserve leadership outlook, while traders are also reluctant to take major positions due to geopolitical concerns, including developments in Venezuela, unrest in Iran and the ongoing Russia-Ukraine conflict. Asian markets had closed mixed on Friday.

Attention remains firmly on the US Federal Reserve meeting scheduled for January 27–28. According to CME Group’s FedWatch Tool, markets are pricing in a 95 percent probability that interest rates will be left unchanged, reflecting expectations of a prolonged pause in monetary tightening.

The Australian share market is notably weaker, snapping a five-session winning streak. The S&P/ASX 200 index has slipped below the 8,900 mark, pressured by broad-based selling led by technology and mining stocks. Gold miners were the lone outperformers, supported by higher bullion prices. Major banks and energy stocks also traded lower, while a handful of stocks gained on company-specific news, including Catalyst Metals following a high-grade gold discovery in Western Australia.

Japanese equities are also significantly lower, extending recent losses. The Nikkei 225 fell toward the 53,400 level, with automakers, technology firms, banks and exporters all under pressure. Weak economic data added to the gloom, as Japan’s core machinery orders recorded a sharper-than-expected decline in November.

Elsewhere in Asia, markets in New Zealand, Hong Kong, Singapore and Southeast Asia are modestly lower, while South Korea and China are trading higher. The Australian dollar is hovering near $0.668, while the US dollar is firm against the yen.

Upcoming Events:

• 01:30 PM GMT – CAD CPI m/m

The post Monday 19th January 2026 : Asian Markets Slide on Wall Street Weakness as Rate Uncertainty and Geopolitical Risks Weigh on Sentiment first appeared on IC Markets | Official Blog.

This is already shaping up to be Spain’s worst rail crash in more than a decade. For some context, the incident involved carriages on a Madrid-bound train that derailed and crossed over to the opposite tracks, colliding with an oncoming train in Adamuz on Sunday evening.

The death toll is “not yet final”, according to Spain’s transport minister. That as more than a hundred passengers are still being treated in hospital. There were roughly four hundred passengers and staff onboard both trains.

Spain’s prime minister Sanchez has now said that he will cancel his trip to Davos to attend to the situation above. He was due to deliver a special address at the World Economic Forum on 21 January at 0900 GMT.

This article was written by Justin Low at investinglive.com.

She is making it official now as she announces that she will be calling a snap election on 23 January. That is when the next ordinary Diet session takes place, in which she will dissolve the lower house of parliament. Takaichi also adds that she will be asking for a mandate to continue as prime minister of Japan.

The likely dates for the snap election are either 8 February or 15 February at this point. All this so as to leave some room for lawmakers and policymakers to come together to deliver on the budget in March.

She reaffirms that her administration will be putting an end to excessively tight fiscal policy, while also tackling high prices. She can lay out any reasons she wants to justify calling for a snap election here. However, it is clear that the power play is all about power consolidation.

As mentioned before:

“So, why is Takaichi planning this move here?

It’s mostly to shore up support and increase the number of ruling coalition seats while her support ratings remain high. All that of course before opposition lawmakers start piling on the questions on her policy setting when the Diet session begins. And the ongoing feud between Japan and China won’t make things easy for her, as it offers up free ammunition for other lawmakers to question her leadership.”

This article was written by Justin Low at investinglive.com.

Oil prices are under some pressure after Trump writes:

I greatly respect the fact that all scheduled hangings, which were to take place yesterday (Over 800 of them), have been cancelled by the leadership of Iran. Thank you!

Iran is a brutal regime that’s quickly sentenced people to death for protesting poor economic conditions. It’s not clear if the US wants to get involved in a war though and we will be watching for signs. The consensus is that it will be much more difficult to dislodge the Iranian regime than what we saw in Venezuela.

Oil prices fell earlier in the week after Trump said something similar on the scheduled executions but that’s minimal comfort for the protestors who were told earlier in the week that ‘help is on the way’ and to keep protesting.

According to the UN, Iran executed around 975 people in 2024 with the number nearly doubling in 2025.

Official government statements claim there was no plan to execute protesters for protest participation alone.

In terms of markets, what matters for oil is whether the bombs will be flying or not and the indication from this is that they won’t be, at least not this weekend.

WTI crude was last at $59.89.

This article was written by Adam Button at investinglive.com.

The latest tariffs threat from US president Trump further exacerbates uncertainty with regards to trade policy. And it also shows that nothing is set in stone when it comes to any “trade deal” that has been struck. As a reminder, Trump threatened the EU with additional tariffs over the weekend unless “a deal is reached for the complete and total purchase of Greenland”.

He will be slapping 10% tariffs on “any and all goods” starting from 1 February and that will jump up to 25% on 1 June after.

The EU is already preparing to hit back and we’re now seeing some added commentary this morning from the region. French finance minister Roland Lescure says that:

• Blackmailing countries is unacceptable
• European countries must remain united
• We must be prepared to use the EU’s anti-coercion mechanism
• Will organise a G7 finance ministers’ meeting in the coming days
• We regret that there is an escalation btu Europe needs to be able to act autonomously

German finance minister Lars Klingbeil also chips in by saying:

• There will be a strong response to US tariffs
• EU is ready to finda solution with the US
• Have no interest in a Transatlantic escalation

Meanwhile, Norway prime minister Jonas Gahr Støre is also out saying that Trump’s tariffs announcement is “unacceptable”. That as Trump wrote a letter to Støre to say that he no longer felt an “obligation to think purely of peace”, clearly still reflecting his saltiness in not being awarded the Nobel Peace Prize by the Norwegian Nobel Committee.

The main question now is whether or not the EU is willing to go tit-for-tat with the US on tariffs in escalating the situation further. If the EU does intend to call Trump’s bluff in anticipating a TACO situation, they have to be prepared that things could get ugly before they get better. One doesn’t need to look too far back to the whole tariffs war with China last year for an example.

This article was written by Justin Low at investinglive.com.

Over the weekend, Trump announced that Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland would face a 10% tariff from February 1, rising to 25% from June 1, unless the U.S. is permitted to buy Greenland. Trump is obsessed with Greenland citing national security reasons. According to him, if the US doesn’t take over Greenland, Russia and China will.

The reason is probably another. Greenland holds some of the world’s largest untapped deposits of rare earth minerals, which are critical for tech manufacturing and advanced weaponry. Currently, China dominates the global supply chain for these minerals. Owning or controlling Greenland’s resources would significantly reduce U.S. economic and military reliance on Chinese exports.

Since last year, we’ve seen Trump using tariff threats as a type of coercion to force other countries to accept his demands. Every time he threatened to impose tariffs, he set a future date for them to come into effect. He used this strategy over and over again to speed up or put pressure on negotiations. Eventually, he always got away with something or outright folded his hand.

This led to the famous TACO trade (“Trump Always Chickens Out”) when the markets react negatively to his tariff threats, stay in a kind of a limbo for some time, and eventually rally as he reaches an agreement or outright folds due to fears of too much market damage (see Liberation Day). It became so obvious that the reactions to his threats started to have less and less effect.

Trump loves the stock market, it’s his “benchmark” of success. He loves to brag about record highs and how that is the result of his actions. Moreover, this year we have the midterm elections and we’ve already seen Trump trying to appease the voters with affordability policies. He’s unlikely to push too hard on tariffs if that results in weakness for the stock market.

This week we have the World Economic Forum in Davos from 19th to 23th January. Trump will be there on Wednesday and other G7 leaders are also expected. That might be the first chance for a meeting. Trump will likely post something on his Truth Social if that happens. If we see de-escalatory language, the market will likely rally on that.

In any case, the market’s focus is now on this latest trade war, and even if we will likely fade the initial negative reaction on the TACO expectations, the upside in the stock market will likely remain capped. Therefore, watch out for develpments in the next days and weeks as they will provide trading opportunities.

This article was written by Giuseppe Dellamotta at investinglive.com.