* Wall Street jumps, reversing Tuesday’s losses on Greenland framework deal

* Dollar sees some demand as POTUS hails ‘productive meeting’ with NATO chief

* Supreme Court appears wary of Trump bid to fire Fed’s Cook

* Charles Schwab’s profit rises on higher trading volumes, interest income

FX: USD printed an inside day denoting some indecision while holding onto the 200-day SMA, with a lot of geo-economic matters enveloping markets. President Trump’s Davos speech yielded some give, in that he said no force would be used to take Greenland. This was positive for risk assets, though there are still longer-term issues for the buck like replacing Fed Chair Powell, sticky inflation and rising bond yields. Later in the US session, Trump dropped European tariff threats and touted a ‘future’ Greenland deal. The maximalist stance was once again simply a bargaining position, or as some will say, another example of TACO (“Trump Always Chickens Out”). In the near-term, seasonality is mildly positive for the dollar this month and more so in February.

EUR paused its bullish move this week.  Sentiment has been key with the world’s most popular currency pair guided by movements in the greenback. That means the cooling in Trump’s tone to Greenland has boosted risk assets and saw dollar buying. The 50-day SMA is 1.1660. CHF was the inevitable underperformer as safe havens got sold heavily. We highlighted that prices in USD/CHF were close to long-term support around 0.7871 and that zone so far did its job.

GBP tapped the 200-day SMA at 1.3403 but closed just above it.  We got mixed CPI data, offering a marginal upside surprise on headline (3.4% y/y vs. 3.3% expected) due to food prices, and modest softness on core (3.2% y/y vs. 3.3%). The BoE’s preferred gauge of “core services”, which excludes volatile and indexed items, came in at 4.0% for the third consecutive month. The release saw very mild softening in BoE rate expectations with the next meeting in early February and no changes expected.

JPY printed an inside day denoting some indecision and consolidation, as markets weighed up competing factors amid ongoing bond market turbulence, election news and intervention chatter. JGB yields have eased back from multi-year highs made on Tuesday as Japan’s Finance Minister gave reassurance about Japan’s fiscal outlook.

US stocks: S&P 500 added 1.16% to close at 6,876, the Nasdaq was up 1.36% at 25,327 and the Dow Jones was higher 1.21% at 49,077. It was the biggest one-day move higher for the benchmark S&P 500 since November 24. The 50-day SMA acted as support. The Vix moved down near 17 after its recent high above 20. All sectors were green with Energy, Materials and Health outperforming, while Consumer Staples and Utilities lagged but closed positive. Gains were led by Tech names like AMD (+7.7%), Micron (+6.6%) and Intel (+11.7%), with the latter reporting its latest earnings after the closing bell today. Netflix fell 2.2% after modest beats, soft guidance and possible higher content spending and costs from the Warner Bros deal.  

Asian stocks: Futures are mixed. APAC stocks were mixed. The ASX 200 saw miners gain but weakness in financials and tech. The Nikkei 225 edged lower again for a fifth straight day as banks and exporters weighed, due to concerns over Japan’s fiscal sustainability. The Hang Seng and Shanghai Comp ticked modestly higher with limited catalysts.

Gold hit more fresh all-time highs at $4,888 as the Greenland crisis, along with Fed independence concerns lingered. But the former tensions cooled with Trump’s speech and later pullback on tariffs in Davos, which saw bugs taking profits and bullion close off their highs.  

Day Ahead – Australia Jobs, US Core PCE

Consensus sees Australia adding 25k jobs in December, after the negative downside surprise last time. The unemployment rate is seen ticking up one-tenth to 4.4%, with the participation rate modestly recovering. There’s a high chance of a rate hike by June, with roughly 21bps priced in. The aussie had been hovering just below 0.67 but that resistance looks to have been broken this week with bulls eyeing the September 2024 top at 0.6942.

The Fed’s preferred measure of consumer inflation, the core PCE deflator figure, is expected to print at 0.2% m/m and 2.8% y/y. These November figures may be influenced by missing data sources during the government shutdown. A print near 3% reinforces the Fed’s wait-and-see stance. The central bank is currently in a blackout period, so no Fed officials are allowed to talk about monetary policy. Policymakers are meant to sit on their hands at their FOMC meeting next week, with only around a 36% chance of a rate cut by April.

Chart of the Day – S&P 500 holds onto 50-day SMA

The benchmark US stock market is barely in the green in 2026. That compares with other indices which have outperformed over recent months and the last year. The Mag 7 have been renamed the ‘Lag 7’ in some quarters, as the market leaders have broadened out while the Tech sector has dragged on the broader market. That compares with only Alphabet and Nvidia doing better than the S&P 500 in 2025. Most recently, after making fresh record highs last week, the index has fallen to the 50-day SMA at 6,832. The first minor Fib level sits below here at 6,698 while the all-time top is 6,986.