* Stocks hit record highs, but Dow Jones hit by healthcare insurer crunch

* Dollar smashed as Trump says the value is “great”, EUR/USD at 4 ½ year highs

* Fed poised for January pause as markets look to Powell for signals

* Microsoft, Meta and Tesla report after US close – reality check for Big Tech

FX: USD fell heavily through the day but selling accelerated late in the US session after Trump comments. Prices crashed through the long-term low from September at 96.21 but closed off the intraday bottom, with focus now on the Fed. See below for more details. President Trump said he did not think the value of the dollar had declined too much, saying it was “doing great” and he expected currency values to fluctuate. USD positioning and sentiment, as seen in short‑dated options, stays heavily skewed against the dollar. Markets are focused on familiar headwinds like questions over Fed independence and foreign investors rotating out of US assets, plus a new layer of risk from volatile domestic politics and renewed government shutdown threats.

EUR made a four and half year high at 1.2082 with CHF leading the major gainers versus the dollar. The Swissie has crashed down through long-term support levels at 0.7872 and 0.7828 which now become resistance. The September 2011 sits at 0.7710 with the August spike low way below at 0.7066. as for the euro, de-dollarisation is driving markets currently even though the yield gap is heavily in favour of the greenback.

GBP was midpack of the majors but still beat the 2025 high from July at 1.3784. The intraday top was 1.3868, a level not seen since October 2021. As we have said for some time now, this is all sentiment driven. That said, markets are not pricing in more BoE rate cuts until mid-year.

JPY soared again as the major plunged down through the 100-day SMA at 153.59, as the major closed near its lows of the day. The next major Fib level sits at 151.61. Unsurprisingly after the drop from Friday’s high at 159.22, this move is oversold though not massively so. Finance Minister Katayama said they are co-ordinating with the US and will take appropriate steps on FX. Those remarks took the major to fresh lows at the time, below 153.

AUD smashed through long-term resistance from the September 2024 high at 0.6942. Eyes are on the quarterly CPI data with consensus expecting a rise of 0.8% q/q and 3.2% y/y. Economists say that has upside risks, which would further boost the current near 60% chance of a February rate hike.

US stocks: S&P 500 added 0.41% to close at 6,979, posting an intraday record high and record close, the Nasdaq was up 0.88% at 25,940 and the Dow Jones was lower 0.83% at 49,03. Tech led the gainers with all but two sectors in the green, with Healthcare and Financials lower on the day. Healthcare was the worst performer (which hit the Dow Jones index), weighed by broad weakness in insurers with UnitedHealth crashing 19.6% and CVS down 14.2%. A WSJ report late on Monday said that the Trump administration is proposing to keep the rates steady that Medicare pays insurers, lower than the expectations of 5%. Microsoft announced a tie-up with RichTech robotics which saw the latter jump over 40%. Micron surged over 5% and Broadcom rose 2.4% extending momentum tied to AI driven demand. GM soared nearly 9% after lifting its 2026 guidance and approving a new $6bn share buyback programme. Boeing slipped 1.6% after underwhelming results, but LMT and RTX rose on strong metrics.

Asian stocks: Futures are mostly green. APAC stocks were mostly higher helped by the rebound Stateside. The ASX 200 rallied on its return from the long weekend with the risk mood helped by M&A headlines. The Nikkei 225 gained despite the stronger yen. The Hang Seng and Shanghai Comp were mixed with Hong Kong higher while the mainland lagged.

Gold continued on its historic way higher, with the bearish looking pin bar candle on Monday being completely ignored. The collapse in the dollar is another great tailwind for bugs. Increasing uncertainty around policy direction in major economies, amplified by President Trump’s disruptive policy moves at the start of 2026, continues to also boost prices. Investment banks are revising their targets with Morgan Stanley the latest to up their number, to $5,700 and Societe Generale to $6,000.

Day Ahead – FOMC, BoC, Big Tech earnings

A lot of big risk events today though the two main central bank meetings could be fairly quiet. After three straight rate cuts, the FOMC are fully expected to pause with inflation still elevated and the labour market slowing but not collapsing. Economic growth is resilient and solid, while record high stock markets are boosting consumers, or at least those top 20% of earners who are very much benefitting from wealth effects in the ‘k-shaped’ economy. That all calls for a wait-and-see stance with officials watching data to see if there is eventually some pass-through to higher prices from tariffs, or inflation eases with softer energy and housing prices, along with weaker wage growth potentially through the year. The next rate cut isn’t fully prices until July, with around 48bps predicted for 2026.

The BoC will also sit on its hands, with preferred core measures of inflation which officials watch, easing and in contrast to headline CPI which was impacted by base effects. The underlying trend sits in the mid-2% range. Otherwise, ongoing upside risks from US tariffs and elevated trade policy uncertainty means wide expectations that the bank keeps rates on hold at 2.25% until potentially early next year.

Megacap tech earnings come thick and fast with Microsoft, Meta and Telsa reporting after the US closing bell. Options markets predict that Microsoft could move +/-4.6%, Meta +/- 5.8% and Tesla +/- 4.6%. The size of these companies means the market’s reaction to their announcements could cause volatility in the entire US stock market, and even markets around the world. The big test is whether AI and Big Tech are still a “spend now, profit later” story, or whether 2026 guidance finally shows clear margin and cash‑flow payback. If several names beat but guide cautiously, expect more rotation under the surface (into value, small caps, cyclicals) even if the indices stay near the highs.

Chart of the Day – Nasdaq broken higher, now near record highs

The tech-heavy pushed higher yesterday above recent resistance around 25,860. The next target is obviously the record high from October at 26,182. Megacap tech companies have in recent months gone from market darlings (“Mag 7”) to relative laggards (“Lag 7”), with only a couple (Nvidia and Alphabet) beating the benchmark S&P 500, while the rest have trailed as investors question rich valuations and massive AI capex. This rotation reflects a broader shift toward cheaper, more cyclical and smaller‑cap names, as markets demand clearer proof that big‑tech’s huge AI and data‑centre spending will translate into durable earnings growth rather than just headlines. We now await the latest results of three of the biggest Tech titans, with Apple releasing their report on Thursday after the close. False upside break or new record highs? We should know very soon… The renewed preference and positioning for Big Tech in recent sessions is notable, as global large caps even beat small caps for the first time this year on Monday.