Market update: dollar weakness drives gold to record highs

Forex

Commodity

Summary:

Dollar weakness drove gold to fresh record highs near $5300, while sterling retreated from multi-year peaks, the FTSE edged higher on miners and energy, and markets stayed volatile ahead of Fed signals.

Sterling retreats after reaching strongest level since 2021

Sterling slipped roughly 0.5% on the day, easing back from its strongest level since 2021. The pullback came as the United States (US) dollar staged a modest recovery after a sharp selloff that had pushed it to multi-year lows.

The British pound's retreat follows a period of significant strength against the greenback. Currency markets remain volatile as traders assess the implications of US policy unpredictability and concerns over Federal Reserve (Fed) independence.

Despite the intraday decline, sterling remains well supported by multi-year levels. The currency has benefited from broader dollar weakness, with the dollar index sliding to a four-year low after falling more than 9% in 2025.

Forex trading remains highly active as traders navigate elevated volatility across major currency pairs. The euro briefly broke above $1.20 for the first time since 2021, whilst the yen strengthened on intervention speculation before the dollar's modest rebound.

FTSE 100 edges higher on mixed trading

The FTSE 100 closed marginally firmer, with gains in miners and energy stocks offsetting declines in defensive sectors. Health care and consumer staples names came under pressure as investors rotated into more cyclical areas.

The blue-chip index underperformed more tech-heavy European peers. ASML's surge to a record high on strong orders dragged European technology stocks higher, whilst Louis Vuitton Moet Hennessy (LVMH) slid sharply on weaker sales figures.

Mining stocks benefited from gold's push towards $5300 an ounce. The precious metal hit fresh record highs above $5260 as the weaker dollar propelled demand for non-dollar assets, supporting commodity trading activity.

Energy names also contributed to the index's modest advance. Oil prices held steady as traders weighed global demand concerns against supply dynamics, providing support for the sector.

Stock-specific moves dominate UK market

Marston's shares tumbled as much as 16% despite delivering a solid festive trading update. Analysts pointed to softer-than-expected trends versus peers and a strong run-up in the share price beforehand as reasons for the selloff.

The pub operator's decline contrasted with strength elsewhere in the consumer sector. Stock-specific factors dominated trading across UK equities, with company updates driving individual share price movements more than broader market trends.

Life Science REIT jumped 19% after agreeing to a takeover by British Land at roughly a 21% premium. The deal lifted sentiment across parts of the real estate sector, demonstrating continued appetite for M&A activity.

Mobico surged 12% on progress in German rail contract negotiations. PayPoint, Mears and Mears also rose on reassuring trading updates and contract wins, highlighting the importance of company-specific catalysts.

Dollar hovers near three-year lows

The US dollar remained under pressure near three-year lows after a heavy selloff. President Trump brushed off concerns about currency weakness, encouraging traders to press bearish US dollar positions.

The dollar index fell to a four-year low, weighed down by concerns over US policy unpredictability and signals that Washington may tolerate a weaker currency. The greenback has declined more than 9% in 2025 as confidence in the currency erodes.

Currency volatility stayed elevated across major pairs. The euro's break above $1.20 marked its strongest level since 2021, whilst sterling reached similar multi-year highs before retreating.

US Treasury yields were little changed ahead of the Federal Reserve (Fed) decision, where no move is expected. Markets remain focused on Fed commentary for signals about the central bank's independence and future policy direction.

Gold pushes towards $5300 on dollar weakness

Gold surged to fresh record highs above $5260 an ounce, with prices pushing towards the $5300 level. The precious metal benefited from the weaker dollar and rising demand for non-dollar assets.

The rally in gold trading reflects investor concerns about currency stability and geopolitical uncertainty. Gold has traditionally served as a hedge during periods of dollar weakness and policy unpredictability.

The move higher comes as central banks remain in focus. Australian inflation data pushed markets to price a greater than 70% chance of a Reserve Bank of Australia (RBA) rate hike next week.

US equities closed at record highs ahead of mega-cap earnings releases, shrugging off the turbulence in currency markets. Asian markets traded mixed, with Hong Kong equities rallying strongly despite elevated forex volatility.

European markets driven by earnings

ASML surged to a record on strong order numbers, lifting European technology stocks. The Dutch semiconductor equipment maker's performance contrasted sharply with weakness in luxury goods, where LVMH slid on softer sales figures.

The divergence between sectors highlighted the stock-specific nature of recent trading. Company fundamentals and earnings updates drove individual share price movements more than broader market factors.

European indices outperformed the FTSE 100, benefiting from greater exposure to technology names. The tech-heavy nature of continental bourses provided support as semiconductor stocks rallied on optimism about order trends.

UK markets face a busy period ahead with further trading updates expected. Investors remain focused on company-specific news flow rather than macro themes, with share trading activity concentrated in names delivering concrete catalysts.

Source:ig

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Daniel Carter

Economic

Mozambique's central bank extended its longest rate-cutting cycle, lowering its benchmark to a record low, while signaling that there is limited scope for further easing.

The Banco de Moçambique reduced the rate, known by its Portuguese acronym Mimo, by 25 basis points to 9.25%, Governor Rogério Zandamela said in a briefing in Maputo, the capital, on Wednesday. While inflation will remain in single-digits for the medium term, risks including severe floods and trade tensions meant the end of the cutting cycle that started two years ago is approaching, he added.

The government is in talks with the International Monetary Fund for a loan package after President Daniel Chapo's administration decided to prematurely end a previous deal in favor of a new one. That will likely require currency depreciation and a better-balanced budget.

Mozambique's economy has been battered by repeated shocks in recent years. The gas-rich nation's output slumped to the lowest since 2020 after post-election unrest last year all but halted activity for months.

The government is also fighting an Islamic State-backed insurgency in the northeastern Cabo Delgado province that's delayed a $20 billion natural gas export project for years.

The nation, frequently hit by weather-related disasters such as tropical cyclones, is currently facing severe flooding in the center and south not seen in more than a quarter century. Parts of cities and towns have been completely submerged this month.

At least 137 people have died since the rainy season began in October, about 240,000 hectares of crops has been lost and sections of the main highway linking Maputo to the rest of the country has been destroyed, according to the authorities. More-than 5,000 kilometers (3100 miles) of roads have been impacted, rendering large areas inaccessible.

Source: Bloomberg Europe

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

King Ten

Remarks of Officials

Economic

Energy

Political

Commodity

Mexico's state-owned oil firm, Pemex, has canceled a planned oil shipment to Cuba in a move widely seen as a response to pressure from the United States. The decision follows President Donald Trump's declaration that "zero" oil should reach the island and recent reports that Washington is pursuing regime change in Havana.

Sheinbaum Acknowledges Shipment Cancellation

During a press conference on Tuesday, Mexican President Claudia Sheinbaum addressed reports about the canceled Pemex shipment, which was scheduled for January. Without explicitly denying the cancellation, she framed the action as a "sovereign decision" made by the state oil company at a time it "deemed necessary."

Mexican President Claudia Sheinbaum addresses the media, explaining that the decision regarding oil shipments was a sovereign one made by the state oil firm.

Washington's 'Zero Oil' Stance Triggers Policy Shift

The policy shift comes after Reuters reported last week that the Mexican government was reviewing its oil sales to Cuba, fearing potential U.S. reprisals. Washington has maintained a full trade embargo against Cuba for decades and intensified its stance by blockading Venezuelan oil shipments to the island late last year. That blockade was imposed shortly after U.S. forces captured Venezuelan President Nicolas Maduro on drug charges.

The disruption of Venezuelan supply elevated Mexico to the position of Cuba's main petroleum provider, accounting for around 44% of its crude imports. However, President Trump’s recent insistence that "zero" money or oil should be sent to the island forced Mexico to reevaluate its trade policy.

When asked about a potential mediating role between the U.S. and Cuba, Sheinbaum stated that Mexico would only act if requested by both nations, though she affirmed her country's commitment to promoting dialogue.

Reports of U.S. Regime Change Plans

Mexico’s diplomatic efforts may face significant headwinds. According to The Wall Street Journal, Washington is actively planning for regime change in Cuba before the end of the year.

The report suggests that U.S. officials are seeking "Cuban government insiders who can help cut a deal to push out the Communist regime." The strategy allegedly uses the capture of Venezuela's Maduro as a "blueprint" for toppling the Cuban state.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Gold and silver prices are strongly higher, with gold leading the way this time, powering to an all-time high of $5,345.00, basis April Comex futures. The precious metals are supported by safe-haven demand as the U.S. dollar wobbles on the foreign exchange market ahead of the conclusion of the Federal Reserve’s FOMC meeting this afternoon. April gold was last up $181.60 at $5,303.00. March silver prices were up $6.668 at $112.60.

CME Group is raising margins on Comex silver futures after prices surged to a record high this week. Margins will rise to 11% of so-called notional from the current 9% for non-heightened risk profile, the exchange said in a statement on Tuesday. The heightened risk profile margins will be raised to 12.1% from the current 9.9%, it said. Platinum and palladium futures’ margin also will be hiked. The change takes effect from Wednesday’s close and follows a “normal review of market volatility to ensure adequate collateral coverage,” the CME said.

Trump says U.S. dollar weakness is good for U.S. business. The U.S. dollar index on Tuesday hit a four-year low and suffered its steepest one-day drop since last year’s tariff rollout after President Trump said on Tuesday afternoon he didn’t think the currency had weakened excessively. “This may very well be the beginning of the next leg lower in the dollar, and many may not be prepared for it,” said Stephen Jen, a former Morgan Stanley currency analyst, and as reported by Bloomberg. “There has been a generation of currency analysts accustomed to dealing with a strong dollar and a strong U.S. economy, and unable to process the scenario of a weakening dollar and a strong U.S. economy.” The U.S. dollar’s recent decline is great for U.S. businesses, Trump told reporters in Iowa. While that’s in line with previous commentary from U.S. officials, his remarks moved currency markets late Tuesday, partly because they appeared to validate the steep decline in the greenback in recent sessions. Gold rallied to another record high overnight, at $5,345.00 an ounce, basis April Comex futures, supported in part by the slumping U.S. dollar index.

FOMC decision day; likely no change in U.S. rates. The Federal Reserve’s two-day Open Market Committee (FOMC) meeting that began Tuesday morning ends early this afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is widely expected to keep U.S. interest rates unchanged. However, the FOMC statement and Powell’s remarks at his press conference will be closely parsed by the marketplace for any clues regarding the trajectory of monetary policy in the coming months, including Fed officials’ comments on inflation.

Amazon cutting 16,000 more jobs… Amazon.com Inc. announced plans to terminate about 16,000 corporate employees, “ratcheting up efforts to streamline bureaucracy amid rising competition over artificial intelligence,” reported Bloomberg. The company will offer U.S.-based employees 90 days to search for a new role internally, as well as severance and other transition support, Beth Galetti, senior vice president of people experience and technology at Amazon, said Wednesday in a blog post. “We’ve been working to strengthen our organization by reducing layers, increasing ownership, and removing bureaucracy,” Galetti said. The job cuts were announced a few months after the company said it was cutting 14,000 jobs. Combined, the total number of terminations echoes the rolling layoffs Amazon instituted in late 2022 and early 2023 that ultimately eliminated about 27,000 people, the Bloomberg report said.

The key outside markets today see crude oil prices up a bit and trading around $62.75 a barrel. The U.S. dollar index is slightly weaker and the U.S. 10-year Treasury note yield is presently 4.24%.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Gold price powers to record high; FOMC on deck_1

Technically, April gold futures bulls’ next upside price objective is to produce a close above solid resistance at $5,500.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $5,000.00. First resistance is seen at the record high of $5,345.00 and then at $5,400.00. First support is seen at the overnight low of $5,193.60 and then at $5,100.00. Wyckoff's Market Rating: 10.0.

Gold price powers to record high; FOMC on deck_2

March silver futures bulls have the strong chart advantage and their next upside price objective is closing prices above solid technical resistance at $125.00. The next downside price objective for the bears is closing prices below solid support at $100.00. First resistance is seen at the overnight high of $116.165 and then at the record high of $117.70. Next support is seen at $110.00 and then at $107.50. Wyckoff's Market Rating: 9.5.

Source: kitco

Risk Warnings and Disclaimers

Add to Favorites

Devin

Economic

US Treasury Secretary Scott Bessent told CNBC Sara Eisen this morning that "the US always has a strong dollar policy".

This statement comes after President Trump's apparent 'comfort' last night with the dollar declining...

When asked if he was worried about losses in the dollar, Trump told reporters in Iowa on Tuesday: "No, I think it's great."

Bessent then dropped two more tapebombs...

While stating that "WE DON'T COMMENT ON INTERVENTION SPECULATION"...

Bessent then confirmed that "US IS 'ABSOLUTELY NOT' INTERVENING IN DOLLAR-YEN NOW"

This prompted yen weakness, retracing some of the post 'rate check' rally...

...and dollar strength...

This move comes minutes after Goldman Sachs Delta-One desk head warned: Near-term, feels dangerous to press dollar downside given how extreme the moves have been.

Source: Zero Hedge

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

King Ten

Data Interpretation

Remarks of Officials

Economic

Germany has downgraded its economic growth forecasts for 2026 and 2027, citing ongoing global trade uncertainty and a slower-than-expected rollout of domestic economic and fiscal policies.

The government now anticipates GDP growth of 1.0% in 2026, a reduction from the previous forecast of 1.3%. The projection for 2027 has also been trimmed from 1.4% to 1.3%.

German Economy Minister Katherina Reiche explained the revision on Wednesday, stating that "the larger economic and fiscal-policy measures that had been expected have not materialized quite as quickly and not to the extent that we had assumed."

Despite the downgrade, these figures represent an improvement over the 0.2% expansion recorded in 2025, which itself followed two consecutive years of economic contraction. The economy ministry's annual report noted that a "cyclical recovery is being supported by stronger domestic momentum, while external headwinds are easing somewhat."

Fiscal Stimulus Lagging Behind Expectations

A key pillar of Germany's growth strategy, a landmark €500 billion ($600 billion) special fund for infrastructure, is facing implementation delays. Although the national parliament approved the fund in March, only €24 billion had been invested by the end of the year, reflecting the slow pace of decision-making within Germany's federal system.

Despite the slow start, the government projects that fiscal policy measures will contribute significantly to the economy, accounting for approximately two-thirds of a percentage point of GDP growth in 2026.

However, economists and business groups have warned that this fiscal package alone is insufficient to secure long-term growth. They are calling for more comprehensive structural reforms to bolster the economy's foundation.

Persistent Headwinds for Trade and Consumption

While government spending is expected to drive growth, other areas of the economy show signs of weakness.

Private consumption is forecast to grow by only 0.8% in 2026, a notable slowdown from the 1.4% growth seen in 2025. This projection assumes the household savings rate will remain unchanged at around 10.5%.

On the trade front, Germany continues to face challenges. The economic report highlights that U.S. tariff increases from last year are still weighing on the global economy. Combined with weaker demand from key export markets outside of Europe, this will likely cause Germany to lose further global market share.

After declining for three consecutive years, exports are expected to see a modest recovery with 0.8% growth.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

A Packed Day: Fed Meeting, Tech Earnings, and Chip Optimism

Today might be the busiest market day of the first quarter if you’re paying close attention to the Fed and earnings calendars. Overnight, ASML reported blockbuster chip equipment orders and this news is already moving U.S. stock index futures.

This afternoon at 19:00 GMT, the Federal Reserve announces its rate decision. And after the stock market close at 21:00 GMT, three of the biggest names in tech—Tesla, Meta, and Microsoft—report earnings. For anyone trading the major indexes, it’s a lot happening at once, which likely means heightened volatility, so be prepared.

ASML’s Record Orders Light Up Semiconductor Sentiment

Daily ASML Holding N.V.

ASML, the Dutch company that makes the machines chipmakers need to produce advanced semiconductors, reported quarterly bookings of €13.2 billion—more than double what analysts expected. The company also announced a €12 billion stock buyback and said revenue from its most advanced equipment should rise significantly in 2026.

The guidance is good news for the chip sector and the AI infrastructure story more broadly. We’ve mentioned several times since earnings season began that the investors weren’t looking at the past, but the future and ASML delivered just what they were looking for. This is even better news for customer stocks because if ASML is seeing strong orders, it suggests companies like Nvidia, AMD, and TSMC are still investing heavily in capacity. Investors may be anticipating this to show up in their earnings reports.

The Nasdaq Composite Index, which leans heavily on semiconductors, got an early boost from the ASML report and is expected to open higher when the cash market resumes trading at 14:30 GMT.

One caveat: ASML noted that China will account for about 20% of revenue this year, down from 33% last year, though traders seem focused on the global demand picture rather than regional slowdowns. In my opinion, China is gradually being accepted as a wildcard in the chip business due to ever-changing regulations.

Powell’s Press Conference Takes on Outsized Importance

No one expects the Federal Reserve to cut rates today, but Chairman Jerome Powell’s press conference afterward could move markets. Investors want to know whether the Fed sees any rate cuts later this year—possibly in June or December—or if it’s inclined to stay on hold longer than expected by remaining data dependent.

There’s also unusual political tension around this meeting. President Trump has hinted he might name a potential successor to Powell this week, and the Justice Department recently issued a subpoena related to the Fed’s headquarters renovation.

Powell has called the investigation politically motivated, but he’s likely to avoid direct political commentary today. Still, the backdrop adds uncertainty to an already closely watched event. After making headlines earlier in the month, the Powell issue has become a whisper, with all experts saying Powell will stay the course until he leaves the position in May.

Three Tech Giants Could Reset the Nasdaq After Hours

After the close, Microsoft is expected to report 15% revenue growth, driven by its Azure cloud business and AI services. Meta’s forecast is even stronger, with a consensus of analysts projecting record quarterly revenue above $58 billion. Both companies carry heavy weight in the Nasdaq, so even small surprises—positive or negative—could swing futures prices after the cash market close.

Nasdaq Index: ASML Surge, Powell Remarks and Megacap Earnings Drive Today’s Forecast_2

Daily Tesla, Inc

Tesla faces a tougher setup. Analysts expect earnings to drop sharply, deliveries fell last quarter, and competition from Chinese automakers like BYD has intensified. Investors will be looking for signs that the shift to a subscription model for Full Self-Driving is gaining traction. Nonetheless, Tesla may be the stock with the greatest volatility after the company reports.

Between the Fed, chip optimism, and heavyweight earnings, today has the potential to reset expectations heading into February. It seems that investors will really be emphasizing the future from the Fed and from the companies reporting. Investors will be looking for “when” the Fed will make its first cut and “when” AI is going to pay off.