The various elements at play, coupled with Japan’s finance minister’s appeal for market stability, appeared to have a positive effect. Japan’s 30- and 40-year yields decreased by approximately 15 basis points today following yesterday’s increase. The capital markets exhibit a delicate tranquility today, with the dollar primarily stabilizing against the G10 currencies. In the meantime, President Trump is set to address the audience at Davos soon. Additionally, today marks the Supreme Court’s consideration of the president’s appeal regarding the dismissal of Federal Reserve Governor Cook. In a scenario that reflects the essence of American exceptionalism as endorsed by the Trump administration, Treasury Secretary Bessent, who was present in the front row of the court alongside the Commerce Secretary and Trade Representative during the proceedings concerning the president’s invocation of emergency powers for the implementation of extensive tariffs, criticized Federal Reserve Chair Powell for his attendance at today’s arguments. Meanwhile, the Supreme Court is expected to deliver its verdict regarding the emergency powers.
The euro reached its highest point yesterday, just under $1.1770 during early North American trading, but subsequently lost its upward momentum. The price has retraced to approximately $1.1710 and is now moving closer to $1.1700 after remaining under $1.1735 throughout the day. Options for 1 billion euros are set to expire today at $1.1690. A break could lead to a level of $1.1650. The Japanese bond market has shown signs of stabilization following yesterday’s significant decline, while the dollar remains within a narrow range of approximately 20 ticks around JPY158, coinciding with the expiration of $1.25 billion in options today. If Japanese officials manage to contain the bond sell-off, there is concern that it may exert pressure on the yen. However, the softer bond yields have not impacted the yen negatively.
Sterling encountered resistance yesterday near $1.3500 and concluded the North American session having relinquished most of its earlier gains. It reached a sale price of nearly $1.3400 today. The intraday momentum indicators are extended, and the $1.3390 level aligns with a retracement target of the recent upward movement. Initial support may be observed near $1.3370. The US dollar traded at approximately CAD1.3815 yesterday. The asset is currently consolidating within a narrow range during the European morning, approximately between CAD1.3825 and CAD1.3845. The 20-day moving average stands just beneath CAD1.3810. The CAD1.3860 level could present a barrier to upward movement.
The Australian dollar continued its upward trajectory from yesterday, climbing to nearly $0.6760 today, marking its peak in two weeks as it briefly surpassed $0.6765. That represented the highest point since October 2024. The day’s peak might still be pending, yet the A$500 million in options set at $0.6800 could be considered excessive.