13/01/2026 Daily Reports
- Fed Independence Fears Abating: Market nerves are beginning to calm. Several Republican lawmakers, led by Senator Thom Tillis, have pushed back against the DOJ’s probe into Jerome Powell. Tillis even vowed to block all future Fed nominations until the “pretextual” legal matter is resolved, signaling to markets that the Fed’s autonomy still has strong institutional defenders.
- Inflation “Heat Check”: All eyes are on today’s December Core CPI release. Analysts expect a “hotter” 0.4% MoM print (consensus is 0.3%). The logic? A post-shutdown rebound in data collection is expected to reverse the “artificial” holiday discounting seen in November, giving the dollar a new fundamental boost.
- EUR/USD Targeting 1.1600: The Euro’s window for a breakout above 1.1700 seems to have closed. The EUR:USD 2-year swap rate gap has widened to its largest since late November, suggesting the Euro may soon drift toward the 1.1600 support level as US rates stay “higher for longer.”
- Yen in Freefall (158.91): The Japanese Yen hit its weakest level since July 2024. Speculation is rampant that PM Sanae Takaichi will dissolve the House of Representatives for a snap election on January 23 (with voting in February). This political gamble, combined with her “fiscal dove” reputation, has pushed USD/JPY dangerously close to the 160.00 intervention zone.
- BoE Watch: Sterling traders are shifting focus to the Bank of England. Governor Andrew Bailey speaks today, and with two MPC members (Taylor and Ramsden) already signaling a preference for cuts, the Pound could face some “dovish” headwinds later this week.
- The “Legitimacy” Trade: Ironically, if the DOJ investigation into Powell is dropped, the Dollar could emerge even stronger. Investors may view a “vindicated” Powell as having more leverage to maintain a hawkish stance to prove his policy isn’t being dictated by the White House.
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Asian Markets Rally: Japan’s Nikkei 225 jumped 3.3–3.6% to fresh record highs, driven by tech sector optimism and expectations of fiscal stimulus. Broader Asian markets also advanced, while US and European equities remain near peaks but cautious.
- US & Europe Futures: Nasdaq futures are trading mixed/softer as investors pause ahead of key US inflation data. European markets, including the DAX, are showing stability with flat-to-positive movement.
- Trump vs. Fed Tension: Market sentiment is being tested by reports that the US Department of Justice has issued subpoenas to the Federal Reserve regarding its headquarters’ renovation. Fed Chair Jerome Powell described the investigation as a “pretext” for political pressure regarding interest rate policy.
- Commodities Spike:
- Energy: Brent crude hit a 7-week high on fears of Iranian export disruptions, though potential supply from Venezuela is limiting the upside.
- Outlook: Despite the current rally, Goldman Sachs forecasts oil prices may trend lower later in 2026 due to a structural supply surplus.
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U.S. equity index futures traded flat to slightly lower on Monday evening as investors adopted a cautious stance ahead of a key inflation data release and the start of earnings season led by major U.S. banks. Dow Jones Industrial Average and S&P 500 futures declined by approximately 0.1%, while Nasdaq 100 futures fell 0.3%. Markets remained in a wait-and-see mode ahead of Tuesday’s release of the December Consumer Price Index (CPI), which is expected to provide a clearer assessment of inflation dynamics following reporting distortions caused by last year’s prolonged government shutdown. According to a Bloomberg survey, economists expect inflation to have remained broadly stable on a month-over-month basis.
