Recent market movements were driven by concerns over economic growth, particularly following weak survey data and a sharp decline in consumer confidence. These factors led to a drop in U.S. Treasury yields, a sell-off in equities, and a weaker dollar. However, the market is showing signs of stabilization. The U.S. dollar is slightly firmer but remains within the previous day's range against major currencies. Meanwhile, commodities saw mixed performance, with copper experiencing a significant rally before retreating, and gold holding above key technical levels. Oil prices remain under pressure, hovering around recent lows.

Asia Pacific Markets

In the Asia-Pacific region, currency movements reflected changes in U.S. yields. The Japanese yen strengthened as the U.S. 10-year yield declined, narrowing the interest rate differential between the two countries. The dollar saw a sharp drop against the yen but remains within a consolidation phase.
Meanwhile, China's offshore yuan appreciated slightly this year, supported by Beijing’s announcement to inject capital into major banks. The move helped lift Chinese bank stocks both onshore and in Hong Kong. The yuan remains in a tight trading range, with investors closely monitoring central bank policies and economic data for further direction.

European Markets

The euro has been trading within a narrow range, with investors weighing monetary policy expectations and economic conditions. The yield gap between U.S. and German government bonds has been shrinking, which may provide some support to the euro. Meanwhile, political maneuvering in Germany over defense spending could influence fiscal policy discussions.
The British pound has faced resistance at higher levels but remains above key support zones. After a significant decline in late 2024, sterling has rebounded moderately. However, upcoming economic reports, including housing data, could impact future price movements. The political landscape also remains a factor, with the British Prime Minister engaging in diplomatic talks.

American Markets

The U.S. dollar remained under pressure as declining bond yields overshadowed concerns about potential tariffs. The two-year Treasury yield hit its lowest level since early November, reflecting shifting market expectations for interest rate policy. The broader Dollar Index struggled to gain traction, despite renewed trade tensions as President Trump reiterated tariff threats against Canada and Mexico. Market participants are also focusing on upcoming housing market data, as rising mortgage rates in January may have slowed new home sales. Meanwhile, the outlook for interest rates remains a key driver for the U.S. dollar’s near-term direction.