Global equity markets extended gains for the second week due to a further cool down in the US inflation, making a sooner Fed pivot more promising. Notably, the high multiples have outperformed US equity markets, with the tech-heavy index, Nasdaq up nearly 4.8 % and the small-cap index, Russell 2000 up 5.2% for the week. At the same time, China’s reopening story plays a main role in gauging global economic trajectory, with a further jump in commodity prices at the back of an improved demand outlook. Following stronger-than-expected US bank fourth-quarter performance, the US big tech earnings will kick off with Netflix, which may further steer the current market bulls. The Bank of Japan’s policy meeting will be also a focus since the central bank had for a policy twist in early December.
What are we watching?
- The US dollar weakens: Cooler inflation has sent the king dollar lower, with the dollar index dropping to the lowest seen in June 2022, supporting a sharp rebound in the other major currencies, especially in the Japanese Yen and the Chinese Yuan. Both USD/JPY and USD/CNH tumbled to the lowest since mid-2022.
- Gold surges: The decline in US bond yields and a softened USD continued to support the sharp rally in gold prices, with gold prices jumping above the key resistance of 1,900, to the highest seen in April 2022.
- Crude oil rebounds: Crude oil prices rose amid China’s reopening optimism and a softened US dollar. The recession fear-induced selloff in oil faded as cooler inflation and bets for a sooner Fed pivot improved the demand outlook.
- Cryptocurrencies spike: The broad rally in risk assets has also boosted sentiment in the cryptocurrencies, with Bitcoin surging above 21,000 and Ethereum jumping above 1,550, the highest seen in November 2022.
Economic Calendar (16 Jan – 20 Jan)

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