Market Report.
🏦 The Federal Reserve left its key interest rate unchanged in the 3.5%-3.75% range, as expected. The meeting and press conference focused mainly on the state of the U.S. economy and labor market, which the Fed sees as having improved since the last meeting.
📉 These “optimistic” remarks should, in theory, have strengthened the US dollar, as they push interest‑rate cuts further out of the equation. However, this has clearly not been the case.
💸 Easier financial conditions, like a strong stock market and weak dollar, are already providing stimulus, reducing the need for the Fed to cut rates further.
🎢 Trump openly stated that he could make the dollar move up and down like a yo‑yo — and, worryingly, that now appears to be exactly what is happening.
📚 Federal Reserve Chair Jerome Powell said the United States’ $38.5 trillion national debt is “not sustainable,” highlighting growing concerns about the long‑term fiscal trajectory.
🥇 Economist Peter Schiff warned that the U.S. dollar is headed for collapse, arguing it will ultimately be replaced by gold. He said the U.S. is approaching an economic crisis far worse than 2008, claiming it would make the global financial crisis look like “a Sunday school picnic.”
⚖️ However, Powell did address the legal case against Fed Governor Lisa Cook, who has been accused of mortgage fraud. This case is seen as potentially the most important legal challenge in the Fed’s 113-year history, as it could determine if President Trump can fire her.
🏛️ Importantly, Powell advised the next Fed chair to avoid getting “pulled into elected politics” and not to do so, emphasizing the need to preserve the Fed’s independence.
🌍 The fact is that what happens at the Fed affects all other central banks around the world.
🇨🇦 The Bank of Canada held its policy rate steady at 2.25%, as widely expected. Governor Tiff Macklem said a high level of trade uncertainty, including the upcoming review of the USMCA trade agreement, makes it difficult to predict the timing and direction of future rate changes.
⚠️ Macklem cited the threat of the U.S. Federal Reserve losing its independence as a contributor to the uncertainty. He noted the Trump administration’s criminal investigation into Fed Chair Jerome Powell.
📈 The Bank of Canada maintained its forecast for modest economic growth in 2026 and 2027, with inflation expected to hover around the 2% target.
🇮🇳 The Reserve Bank of India is expected to keep its key interest rate steady at 5.25% through 2026, according to a majority of economists polled by Reuters. RBI will probably hold the repo rate at 5.25% at its upcoming meeting on February 4-6.
🏗️ Growth in India is currently being driven more by government spending rather than private investment, which is still lagging despite the RBI’s previous rate cuts. The RBI has also been caught between supporting the economy and intervening in currency markets to defend the rupee, which has been under pressure as foreign investors withdraw funds from the Indian stock market.
💧 These currency interventions have drained liquidity from the banking system, dampening the impact of past rate cuts.
🇬🇧 UK Prime Minister Keir Starmer is in China.
🤝 Starmer pledged to seek a more “mature” relationship with China, saying it is in the UK’s national interest to engage with the world’s second-largest economy. The visit is expected to lead to diplomatic wins for the UK, such as approval to rebuild its embassy in Beijing and potentially visa-free travel for British citizens.
⚖️ Starmer rejected the notion that he would have to make trade-offs between the UK’s relationships with the US and China. China’s trade surplus with the UK surged last year as Chinese exporters sought new markets amid the US-China trade war.
🌐 The visit comes as a stream of G7 leaders are set to visit China, as Beijing seeks to smooth ties with Western countries diversifying their trade relationships. Canada’s Prime Minister Mark Carney is due to make his first visit to China in eight years, with Beijing describing it as an important high‑level visit. French President Emmanuel Macron is expected to travel to China in the context of France hosting the 2026 G7 summit.
🏔️ China is not a G7 member, but France is considering inviting Xi Jinping as a guest to the G7 summit in Évian‑les‑Bains on 15–17 June 2026.
🏢 In the corporate world, there are also news.
📱 Meta, Microsoft, and Tesla all reported better-than-expected earnings and revenue for the final quarter of 2025.
📢 Meta: Beat on earnings and revenue, with strong ad growth and expanding operating margins. Investors were encouraged by Meta’s aggressive 2026 AI capex and infrastructure roadmap, seeing it as underpinning future earnings power.
🚗 Tesla: Narrow beat on earnings and revenue. Investors focused on improving automotive margins, record energy segment profits, and progress on autonomous driving and the Optimus robot program.
💻 Microsoft: While the headline numbers beat consensus, investors were more concerned about heavy AI and cloud capex, as well as signs of margin pressure. After a run-up that pushed Microsoft above $4 trillion in market value, expectations were very high, so guidance and commentary on future spending and profitability mattered more than the backward-looking beats. Microsoft’s stock declined in after-hours trading.
Geopolitics.
❄️ The U.S. and Denmark have started talks to discuss a new framework deal over Greenland, an attempt to satisfy President Trump’s desire for a greater American presence on the Arctic island without ceding it to the U.S.
🗣️ The senior officials from the U.S., Denmark, and Greenland met to “discuss how we can address U.S. concerns about security in the Arctic while respecting the red lines of the Kingdom.”
📜 The negotiations follow Trump’s announcement last week of a “framework of a future deal,” in which he pledged to refrain from imposing tariffs on European nations opposing his effort to take possession of Greenland.
🇪🇺 Denmark and Greenland’s leaders are in Berlin and Paris this week to shore up European backing amid the negotiations with the U.S. Secretary of State Marco Rubio told lawmakers the talks would take place in a “very professional, straightforward way” and that the U.S. is “in a good place right now” on Greenland.
🚢 The U.S. is continuing to build up military assets in the Middle East, with President Trump sending an additional destroyer, the USS Delbert D. Black, and an RC‑135V electronic surveillance aircraft to the region, according to The War Zone (TWZ). The deployments add to U.S. forces already massing amid rising regional tensions.
🚫 Iran is refusing to negotiate with President Trump, according to multiple reports. Iran has halted the exchange of diplomatic messages with the U.S. via Oman, and Axios, citing senior U.S. officials, says there are “no serious negotiations” underway, with Tehran unwilling to take a deal.
🔥 An Iranian source told Al Mayadeen that, “Given the enemy’s military buildup, negotiation is not our priority; rather, decisive defense is at the forefront of our priorities,” underscoring Tehran’s shift toward a hard‑line stance amid rising tensions.
⚠️ Iran has warned that it will treat any attack as an “all-out war” against the country. A senior Iranian official stated that Iran’s military is on high alert and ready for the “worst-case scenario.”
🛳️ This comes as a U.S. military aircraft carrier strike group and other assets are heading to the Middle East in the coming days, amid heightened tensions between the U.S. and Iran.
Market View.
🏦 The Federal Reserve kept interest rates unchanged and struck a moderately optimistic tone regarding the US economy and labour market.
💵 However, despite this stance, the US dollar continues to weaken. The DXY index has broken below what appeared to be key support around 96 points, falling to approximately 95.85. EUR/USD moved close to the 1.21 level in recent hours before pulling back to around 1.1980.
📊 Meanwhile, S&P 500 futures are making another attempt to push higher, trading above 7,025 points, while Nasdaq 100 futures are holding above 26,255 points.
🇪🇺 In Europe, DAX 40 futures have retreated since yesterday to around 24,900 points, and Euro Stoxx 50 futures have fallen to approximately 5,970 points. At this stage, a degree of market nervousness is becoming increasingly evident.
🛢️ The oil market continues to strengthen, with spot Brent crude approaching $68.60 per barrel.
🥇 Gold futures are extending their rally, posting new record highs on a daily basis, now trading above $5,625 per ounce.
₿ Bitcoin continues to miss recovery opportunities and has once again moved lower, currently trading around $87,865.
