The risk complex remains slightly positive early Tuesday despite trade and geopolitical tensions, as markets position for Wednesday’s Federal Open Market Committee (FOMC) meeting. Traders largely ignore upbeat U.S. data and continue selling the U.S. Dollar, allowing Gold and Silver to remain firm. However, crude oil fails to gain from geopolitical risks, as concerns over weaker demand and higher output from the Organization of the Petroleum Exporting Countries and allies (OPEC+) weigh on prices.
U.S. November durable goods orders rose to a six-month high of 5.3%, beating expectations of 3.2% and improving from a revised -2.2%. Orders excluding defense increased 6.6%, led by transportation equipment, which rose $15.3 billion or 14.7% to $119.3 billion. The Chicago Fed National Activity Index (CFNAI) improved to -0.04 from -0.42, the highest in eight months. The Dallas Fed January manufacturing index rose sharply to -1.2 from -11.3, while the Atlanta Fed Gross Domestic Product Now (GDPNow) estimate held at 5.4% for the fourth quarter (Q4).
On trade, U.S. President Donald Trump said tariffs on South Korean goods will rise to 25% from 15% after Seoul failed to ratify a 2025 trade deal, targeting autos, lumber, and pharmaceuticals, and reviving Asia-Pacific trade tensions. Hyundai Motor shares initially fell about 4%. Later, a South Korean ruling party official said legislation to implement U.S. investment commitments has been introduced, while Seoul’s trade envoy is expected to visit Washington to meet the Office of the United States Trade Representative (USTR).
The Financial Times reported that the European Union (EU) is preparing a major trade deal with India. In Japan, the Bank of Japan (BoJ) said the services producer price index rose 2.6% year-on-year (y/y) in December, signaling persistent wage-driven inflation. In the United Kingdom, shop price inflation rose to 1.5% y/y in January, the fastest since early 2024, according to the British Retail Consortium (BRC), driven by higher energy costs and increased employer National Insurance contributions.
In Australia, the National Australia Bank (NAB) survey showed business conditions rising to +9 from +7 and confidence improving to +3 from +1 in December. Capacity utilization remained high at 83.2%, while wage and cost pressures edged higher, and retail price growth slowed to its weakest pace since 2020.
China’s industrial profits rose 5.3% y/y in December after a 13% drop in November, delivering a modest full-year gain of 0.6%, the first since 2021. The recovery was driven by foreign firms, while profits at state-owned enterprises fell 3.9% and private-sector profits were flat.
On geopolitics, the New York Times reported that intelligence assessments suggest Iran’s leadership is under increasing strain, possibly at its weakest since the 1979 Islamic Revolution. Late talk of potential military intervention in Iran helped keep support under oil and gold.
The U.S. Dollar remained soft, while the Canadian Dollar (CAD) lagged after Trump threatened 100% tariffs on Canada if it did a free trade agreement with China.
Against this backdrop, the U.S. Dollar Index (DXY) remains pressured at the lowest level since mid-September, despite lacking downside momentum of late, which in turn allows gold and silver to reverse the previous day’s retreat from an all-time high (ATH). Meanwhile, WTI Crude Oil extends the week-start pullback while major currencies and Antipodeans stall previous rallies. That said, cryptocurrencies defend Monday’s recovery, and the Asia-Pacific shares are also edging higher, tracing Wall Street’s modest gains.
EURUSD and GBPUSD pause their three-day rally and retreat from the highest levels since mid-September as U.S. Dollar bears take a breather. The pullback is supported by geopolitical concerns, including U.S. opposition to the European Union’s potentially largest trade deal with India and the UK Prime Minister’s visit to China to tighten trade ties. As a result, the Euro ignores upbeat remarks from European Central Bank (ECB) officials, while the Pound overlooks positive sentiment and spending data from the United Kingdom.
Elsewhere, USDJPY rebounds from a 10-week low to end a two-day losing streak amid expectations of Japanese stimulus, possible government intervention to support the Japanese Yen (JPY), and the Bank of Japan’s (BoJ) likely rate hikes in 2026. Political momentum in Tokyo ahead of February’s snap election and rising China–Japan tensions also pressure the JPY, even as BoJ policy concerns help limit further losses in the Japanese currency.
AUDUSD eases from a 16-month high, snapping a six-day winning streak, while NZDUSD posts its first daily loss in eight sessions after retreating from the highest level since mid-September. At the same time, USDCAD extends its rebound from a one-month low as crude oil, Canada’s key export, posts a two-day losing streak and the U.S. renews threats to impose heavy tariffs on Canada if it signs a free trade deal with China.
Upbeat China industrial profits, Aussie NAB data, and a softer U.S. Dollar fail to support the Australian Dollar (AUD), New Zealand Dollar (NZD), and Canadian Dollar (CAD), leaving all three currencies under mild corrective pressure.
WTI crude oil trims its first monthly gain in five by falling for a second straight day, pressured by easing geopolitical risks, lingering supply fears, and the Organization of the Petroleum Exporting Countries and allies (OPEC+) signaling readiness to raise output. At the same time, upbeat China data and expectations of stronger energy demand, as economic pressures ease in China and other major oil consumers, could challenge oil sellers. Additional support risks come from potential U.S. military strikes on Iran, Greenland, and Cuba, as well as renewed tensions involving Canada, which may keep downside limited.
Although the financial markets consolidate previous moves on Tuesday, the fundamental strength of the gold and silver prices, amid growing economic and geopolitical uncertainty allow the bullions to reverse the previous day’s pullback from their all-time highs. Notably, Silver posted the biggest daily jump the previous day since 1980
Like major currencies and crude oil, cryptocurrencies struggle to hold earlier gains, with Bitcoin (BTC) and Ethereum (ETH) posting only mild advances after Monday’s rebound. Asia-Pacific equities edge higher, while European and UK shares trade mixed, following a positive close for the Wall Street benchmark.
U.S. equities brushed aside government shutdown fears and ended higher, led by large-cap stocks. Cisco Systems (CSCO), Oracle (ORCL), Apple (AAPL), American International Group (AIG), and Meta Platforms (META) led the gains, while Intel dropped 5.8% and Tesla fell 3.1%.
Tuesday’s economic calendar features U.S. ADP Employment Change, Consumer Confidence, and speeches from U.S. President Donald Trump and European Central Bank (ECB) President Christine Lagarde. Key events to watch also include Trump’s tariff actions on India, South Korea, and Canada, as well as geopolitical developments involving Iran, Greenland, and Cuba.
With the U.S. Dollar Index (DXY) failing to gain from firmer data, further weakness in incoming statistics could push the greenback toward September’s low, supporting Gold, Silver, and the Japanese Yen (JPY). Crude Oil may continue its recent weakness, while cryptocurrencies and equities could extend the latest rebound.
May the trading luck be with you!
