The US dollar is exhibiting a narrow mixed performance against the G10 currencies. The market is closely monitoring the upcoming US employment data, which frequently disrupts trading, set to be released on Friday. Indications point towards a potential ruling by the US Supreme Court regarding the legality of the extensive US tariffs enacted under emergency power legislation. It appears that the prevailing sentiment is that the high court will determine the tariffs surpass presidential authority and contravene the “major questions” doctrine. It is certain that this will not conclude US initiatives, but it will probably shift their focus through alternative legislative measures. It is important to note that there existed a secondary market where certain businesses allegedly sold the rights to a refund for 40-50 cents on the dollar. Meanwhile, while commentators may discuss American exceptionalism, the US actions in Venezuela and the exemption provided to US companies from the global agreement for a 15% minimum tax on corporate profits indicate that certain aspects continue to be strong. The euro reached a high yesterday close to $1.1745, coinciding with the 20-day moving average, before declining to approximately $1.1685. The losses continued today, dipping just below $1.1675 while maintaining a position above Monday’s low near $1.1660. Recall that the 1.1650 area corresponds to a retracement objective of the euro’s rally from late November. Options for 685 million euros at $1.1725 are set to expire today.

The dollar continues to trade within the range against the yen established on Monday, approximately JPY156.10 to JPY157.30. Today, it has fluctuated within the range of JPY156.30 to JPY156.80. Options appear to establish a ceiling for the dollar at JPY157, with $1.33 billion in options set to expire there today, alongside an additional $2.88 billion of options expiring tomorrow. Sterling peaked at approximately $1.3570 yesterday, marking its highest point since mid-September, before declining to around $1.3490. Today, it reached a slight new low at $1.3485. This represents slightly over 50% of the increase observed from Monday’s low to yesterday’s peak. The 20-day moving average stands at approximately $1.3455. The greenback made modest gains, pushing through CAD1.3825 today, marking its highest level since December 10. However, sellers appeared in the European morning, driving the US dollar down to nearly CAD1.3800. There is a total of $1.3 billion in options at CAD1.3800 set to expire today, alongside approximately $850 million at CAD1.3835, which also has an expiration today. For a clear indication that a peak has been established, the US dollar needs to be traded below CAD1.3750-55.

The Australian dollar continued to strengthen during the local session, surpassing $0.6765 and achieving its highest level since October 2024. Some buying may have been related to the expiry today of options at $0.6700 for A$400 million, with tomorrow’s expiry of A$1.05 billion options at $0.6735. The dollar continues to trade within the range observed on Monday against the Mexican peso. The market remains in a state of consolidation. The current trading range today has been relatively tight, fluctuating between MXN17.9630 and MXN17.9955. For the first time this week, the PBOC established the dollar’s reference rate at a higher level. The dollar reached its lowest point against the offshore yuan on January 2, approximately at CNH7.9665. Today, it achieved a new peak since the end of December, reaching approximately CNH6.9930. The US dollar is experiencing a stronger position against the Indian rupee, following reports of intervention by the Reserve Bank of India aimed at mitigating capital outflows and selling pressure, as discussions with the US have not succeeded in reducing the elevated tariffs.

Global equities are showing a varied performance today. This observation holds especially in the Asia Pacific region. Rising tensions between China and Japan seem to be negatively impacting sales at Japanese department stores, coinciding with a decline in tourism from China. This situation may have led to some profit-taking in Japanese equities, although the overall regional performance has shown a mixed outcome. Europe’s Stoxx 600 is attempting to build on its upward momentum for the fourth consecutive session, marking the sixth gain in the last seven sessions. US index futures are experiencing minor declines. Bonds are experiencing a rally. Benchmark European yields have generally decreased by 3-4 basis points, with UK Gilts showing a more significant decline of nearly seven basis points. The yield, currently around 4.42%, marks the lowest level since November, attributed to strong demand observed at today’s auction. The 10-year Treasury yield has decreased slightly by over three basis points, now standing at 4.14%. Gold and silver are experiencing significant trading activity, which some analysts have associated with the rebalancing of industry indices. Reports indicate that the US plans to take and sell approximately $2.8 billion worth of Venezuelan oil, which initially caused February WTI to dip below $56. However, it has since rebounded, returning to around $57 where it opened. Yesterday’s low was approximately $56.85. Saudi Arabia has declared the opening of its markets to foreign investors, effective February 1, eliminating the necessity to fulfill qualification requirements. This represents a significant advancement in the integration of global capital markets.