Market Report.
💵 The U.S. dollar fell to its lowest level since early 2022 after President Donald Trump signaled he is comfortable with the currency’s decline. When asked if he was concerned, Trump said, “No, I think it’s great,” adding that strong business activity shows “the dollar’s doing great.”
🏦 Institutional investors are proactively managing currency risks in response to the anticipated weakening of the U.S. dollar.
🇦🇺 ART, Australia’s second-largest pension fund with A$353 billion in assets, is increasing its currency hedging to reduce exposure to a weakening U.S. dollar. The fund expects the U.S. dollar to weaken this year due to anticipated interest rate cuts in the U.S., while rates are expected to rise in other major economies like Japan and Australia.
📉 The U.S. administration is seen as wanting a weaker dollar to boost U.S. competitiveness. And they are not wrong. It’s clear that Trump is able to weaken the dollar as he wanted, even before the Federal Reserve’s actions. His words seem to be more effective than the Fed’s monetary policy.
🥇 Gold and Aussie climb: Reuters reported last week that Australia’s second-biggest pension fund, Australian Retirement Trust, is reducing dollar exposure through hedging, while hanging on to its U.S. investments.
📊 Rates are giving the Aussie an extra boost and after data on Wednesday showed hotter-than-expected underlying inflation in December, markets put the chance of a rate hike next week at more than 70%.
🪙 The new age is marked by the strategic movement of gold, which is not only being played out by central banks of great powers but also by the corporate world.
🔐 Tether’s gold strategy reflects the company’s belief in the potential for a gold-backed alternative to the U.S. dollar to emerge, and its efforts to position itself as a major player in this potential shift in the global monetary system.
🏆 Tether Holdings has become one of the biggest players in the global gold market, with a hoard of around 140 tons of gold worth approximately $23 billion.
⛏️ The company is buying gold at a rate of about 1–2 tons per week and plans to continue doing so, with the goal of having a steady and stable long-term access to gold.
🔮 Tether’s CEO Paolo Ardoino predicts that Washington’s geopolitical rivals will launch a gold-backed alternative to the U.S. dollar, and the company is preparing to capitalize on this trend with its gold token, Tether Gold (XAUT).
📈 Tether is not just buying physical gold, but is also taking stakes in gold royalty companies to further expand its exposure to the precious metal.
🏛️ The company views its gold holdings as similar to a central bank’s reserves, valuing gold for its liquidity and status as a reserve asset not tied to any government’s debt. Tether’s large-scale gold purchases have likely contributed to the recent rally in gold prices.
💰 Gold prices have broken through the $5,200 per ounce level for the first time, reaching a record high of $5,266.37 per ounce, fueled by the weakness of the dollar, as we mentioned.
🏦 According to Bloomberg, European politicians are learning to stand up to U.S. bullying, but the chance of European banks collectively making a real dent in American dominance is slender. The big U.S. banks like Goldman Sachs, JPMorgan, and Morgan Stanley are simply much larger and more intertwined with the hedge funds and private asset managers that provide the majority of fees globally.
📉 Over the past five years, the market share of the top five European investment banks has slipped from nearly 30% to less than 27% in dollar terms. Hopes that European companies will increasingly turn to local banks due to antagonistic U.S. policies have not materialized yet. U.S. banks still dominate these markets.
🚗 Yesterday we discussed the advantages for Europe’s automobile industry of the free trade agreement with India. Today we add more details.
🌏 India is actively pursuing a diversified trade strategy and seeking to deepen economic ties with major global partners, not only with the EU but also with the U.S. It’s unclear if President Donald Trump will make any comments on the agreement between the EU and India, given the tariffs he imposed on India in 2025.
📦 The India–EU trade deal will remove or reduce tariffs on more than 90% of goods traded between the two sides. The deal will see India reduce tariffs on European automobile and agricultural products, while the EU will do the same for Indian textiles, leather, marine products, and gems and jewelry.
🔁 Many of these Indian exports have been affected by U.S. tariffs of up to 50%, so the deal provides an alternative market for them.
📤 The EU expects the deal will help it double its exports to India by 2032, as it will reduce tariffs on over 90% of European exports to India.
🇺🇸 But India is also moving forward on a deal with the U.S.
🛢️ According to India’s Petroleum and Natural Gas Minister Hardeep Singh Puri, the U.S.–India trade deal is currently in a “very advanced stage” of negotiations.
⏳ Puri expressed optimism that the deal will be finalized “sooner rather than later,” though he acknowledged he is not a “soothsayer” and cannot predict the exact timeline.
🤝 Puri described the relationship between the U.S. and India as “very strong” and said India supports a multilateral trading system, as evidenced by the recent trade deal signed with the EU.
🇬🇧 Meanwhile, a high-level meeting between the UK and China is expected. The consequences for relations with the U.S. remain unclear, especially considering Trump’s response to meetings between Canada and China. Following the announcement of new commercial cooperation agreements, Trump announced an additional 100% tariff on Canada if it signs a commercial agreement with China.
✈️ This will be the first visit by a British Prime Minister to China since 2018, as Starmer seeks to mend ties and improve trade and economic relations with the world’s second-largest economy.
📊 Starmer sees improving relations with China as a way to reduce the UK’s dependence on an increasingly unpredictable United States. He views closer economic and trade ties with China as a way to boost investment and living standards in the UK.
🖥️ ASML reported earnings above estimates, with bookings significantly exceeding consensus expectations. The company also announced a new share buyback program of up to €12 billion, running through the end of 2028.
🧭 Geopolitics.
⚠️ A new U.S. national security document depicts Iran as less of a fundamental threat compared to previous documents, but the U.S. still views Iran as a threat, especially regarding its nuclear program and influence in the region.
🕊️ The U.S. has two main options: moving towards an agreement with Iran or adopting a military option. The U.S. seems to want to stop Iran’s nuclear capabilities without getting bogged down in another war. Some in the U.S. administration are willing to exhaust diplomatic solutions before considering military action.
🛡️ Iran is prepared for both diplomacy and defense. It has increased its military readiness and is willing to retaliate harshly against any U.S. aggression. The U.S. is using economic pressure and support for protests inside Iran as leverage, but Iran has adapted its economy and seems to be ready to withstand these pressures.
🗣️ Meanwhile, Trump also has something to say to Iraq:
📣 “I’m hearing that the Great Country of Iraq might make a very bad choice by reinstalling Nouri al‑Maliki as Prime Minister. Last time Maliki was in power, the Country descended into poverty and total chaos. That should not be allowed to happen again. Because of his insane policies and ideologies, if elected, the United States of America will no longer help Iraq, and, if we are not there to help, Iraq has ZERO chance of Success, Prosperity, or Freedom. MAKE IRAQ GREAT AGAIN!”
📈 Market View.
💥 The U.S. dollar has suffered a spectacular sell‑off following Trump’s remarks, with the DXY index plunging towards the 95.50 level before rebounding to around 96 points. EUR/USD surged to 1.2080, although it has retreated in recent hours and is now trading below the 1.20 level.
📊 Meanwhile, equity markets remain relatively stable, with S&P 500 futures holding above 7,030 points and Nasdaq 100 futures trading above 26,300 points.
🇪🇺 In Europe, DAX 40 futures are attempting to consolidate above the 25,000‑point mark, while Euro Stoxx 50 futures are trying to break through the 6,030 level.
🛢️ Oil prices are trading at year‑to‑date highs, with spot Brent crude reaching $67 per barrel before easing slightly to around $66.50.
🥇 Gold futures have posted fresh record highs and are now approaching the $5,300 per ounce level — a target area we highlighted several days ago.
₿ Bitcoin continues to disappoint crypto market participants, as it now appears to be facing fresh resistance around the $89,000 level.
