09/02/2026 Daily Reports
USD: Under Pressure
- The “Push-Pull” Effect: Risk assets are back in favor. US tech recovered last week, making overseas markets look more attractive . Meanwhile, soft labor data at home is forcing markets to rethink the Fed’s next moves.
- Treasury Warning: China’s state regulator has reportedly urged private banks to trim their US Treasury exposure to avoid “concentration risk.” This hits at a time when the “de-dollarization” narrative is already gaining steam.
JPY: The “Buy Japan” Story
- LDP Landslide: The Liberal Democratic Party’s massive win in Sunday’s election has energized the Nikkei.
- Policy Shift: Instead of a “Sell Japan” panic, the focus has shifted to growth. Markets are now pricing in a higher BoJ policy rate, keeping USD/JPY traders on high alert near the 158.00 intervention zone.
EUR: Seeking Stability
- The Alternative: As China cools on Treasuries, the Euro is positioning itself as the primary alternative for liquidity.
- Reform Hopes: All eyes are on the Belgium summit this Thursday. Any progress on the “Savings and Investment Union” could provide a significant tailwind for EUR/USD, targeting 1.1900.
GBP: Political Turmoil
- Starmer Under Fire: Prime Minister Keir Starmer is facing a crisis of confidence following the resignation of his Chief of Staff over the Peter Mandelson appointment scandal.
- Sterling Slump: Between domestic political instability and a dovish Bank of England, the Pound is struggling. EUR/GBP is trending toward 0.8745, with more pain likely if leadership rumors intensify.
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Global markets turned constructive as Japan led gains following a decisive political outcome. The Nikkei 225 jumped ~2.6% to around 55,400 after Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a landslide victory and “supermajority” (310+ seats). Investors welcomed the prospect of continued Abenomics-style fiscal stimulus and aggressive monetary easing. Chip heavyweights Tokyo Electron and Advantest spearheaded the rally, riding renewed semiconductor optimism.
- Europe followed Asia higher. Germany’s DAX rose about 0.8%, supported by firmer U.S. futures and a surprise 0.4% month-on-month rise in December Industrial Production, defying expectations for a contraction. Tech shares including ASML and SAP rebounded after last week’s global AI-driven selloff.
- In the U.S., Nasdaq 100 futures advanced as investors bargain-hunted mega-cap names such as Nvidia and Microsoft following the recent AI CapEx rout. Analyst upgrades from major banks defended elevated AI spending, highlighting long-term return potential and easing margin-pressure concerns. Markets now await Fed commentary for clues on policy direction after Kevin Warsh’s nomination as the next Fed Chair.
- Commodities were steadier. Gold hovered near $4,920/oz after last week’s sharp liquidation, aided by a pause in the U.S. dollar rally. Brent crude slipped toward $65.80/bbl as easing U.S.–Iran tensions reduced the geopolitical “war premium,” while rising U.S. gasoline inventories kept demand concerns in focus.
