In addition, the dollar is weighed down by speculation that the US might coordinate FX intervention with Japan to boost the yen, which would dovetail with Mr. Trump's apparent view that a weak dollar is good for the US as a stimulus to US exports. The yen rose to a 2.75-month high against the dollar on Tuesday as US authorities reportedly contacted market participants last Friday to check dollar/yen prices, a possible precursor to intervention.The dollar is also under pressure due to US political uncertaint ...

Bitcoin prices recovered to the $88,000 level on Wednesday following a sharp sell-off earlier in the week, effectively resetting the market before a series of economic events, according to a QCP Capital market update. QCP Capital described the current price action as a technical recovery facing a “Wall of Worry” that includes a Federal Reserve decision and a looming government funding deadline. The trading and investment firm identified the $88,000 level as a critical “trap door” for the cryptocurrency. ...

Key TakeawaysPresident Donald Trump has announced the deployment of a "massive armada" towards Iran, including a carrier strike group, escalating geopolitical tensions in the Middle East.Trump is expected to announce his choice for Federal Reserve Chair soon, signaling a push for lower interest rates that is already contributing to a four-year low for the U.S. dollar and benefiting Asian currencies.The S&P/ASX 200 Index (XJO) in Australia surged by 0.9% to 8,941.6 on Tuesday, reaching a three-month high, dr ...

Core Viewpoint - The Federal Reserve is expected to maintain its key interest rate steady after a series of cuts, amid concerns about the job market and inflation [1][4]. Group 1: Federal Reserve's Interest Rate Decisions - The Federal Open Market Committee (FOMC) is meeting to consider whether to cut the federal funds rate from its current range of 3.5% to 3.75% [2]. - The Fed has cut its interest rate by a quarter of a percentage point at each of the previous three meetings to prevent a job market slowdown from escalating into higher unemployment [2]. - Financial markets are pricing in a 97% chance that the Fed will hold rates steady, reflecting uncertainty about the economy's direction [4]. Group 2: Economic Implications - The federal funds rate influences borrowing costs for short-term loans, such as credit cards and car loans, and indirectly affects mortgage rates [5]. - Lower interest rates generally encourage spending and economic growth, while higher rates tend to reduce demand and help control inflation [5]. Group 3: Political Context and Leadership - Tensions between Fed Chair Jerome Powell and President Trump have escalated, leading to a criminal investigation regarding Powell's congressional testimony [7]. - Trump has expressed a desire to replace Powell as chair, with potential candidates including economic adviser Kevin Hassett and former Fed president Kevin Warsh, while Rick Rieder is seen as a front-runner [9]. - Powell's term as chair ends in May, but he may continue on the policy committee, and he is expected to face questions about his future during the upcoming press conference [10].

Core Viewpoint - The U.S. Federal Reserve is expected to maintain its key interest rate through the current quarter and possibly until Chair Jerome Powell's term ends in May, a shift from previous expectations of rate cuts by March [1][4]. Economic Outlook - The U.S. economy is projected to continue growing strongly, with a growth rate of 4.3% in the third quarter and an expected expansion of 2.3% this year, up from 2.2% last year [8]. - Inflation remains above the Fed's target of 2%, which argues against near-term rate cuts, although economists anticipate at least two reductions later in the year [2]. Federal Reserve Policy - A majority of economists (58%) expect the Fed to keep rates at 3.50%-3.75% during the January meeting, contrasting with last month's expectations for at least one reduction [4]. - There is a divided outlook among Fed policymakers, with a slight majority (55 out of 100) expecting rate cuts to resume after Powell's term ends in May [6]. Political Influence - President Trump has criticized Powell for not lowering rates aggressively and has initiated criminal charges against him related to Fed headquarters renovations, which may impact the Fed's independence [3][7]. - The selection of the next Fed chair is anticipated to face significant pushback due to ongoing investigations, potentially affecting future interest rate decisions [7].

Core Viewpoint - The US Supreme Court will hear arguments regarding President Trump's attempt to remove Federal Reserve Governor Lisa Cook, marking a significant confrontation between the executive branch and the central bank [1][2]. Group 1: Legal Context - A federal court has blocked Cook's removal, allowing her to remain on the Federal Reserve's rate-setting board, which will test the limits of presidential power [2]. - Trump's attempt to fire Cook is unprecedented, as it is the first time a sitting president has sought to remove a Federal Reserve governor [4]. - Cook's lawyers argue that she can only be fired "for cause" and that her due process rights were violated [6]. Group 2: Political Dynamics - The Trump administration is engaged in a contentious battle with the Federal Reserve over interest rates, as Fed officials have resisted calls for significant rate cuts [2][12]. - The Department of Justice has initiated a criminal investigation into Jerome Powell, the Fed chairman, which has drawn criticism and is perceived as politically motivated [3]. - Trump has publicly criticized Powell, calling him "a stupid person," and has expressed a desire to fire him, although he backed down when market reactions were unfavorable [11]. Group 3: Federal Reserve's Structure and Independence - The Federal Reserve operates as a quasi-private entity with a unique structure that grants it more independence than other government agencies [9]. - The Fed's Federal Open Market Committee is responsible for setting interest rates, which are determined at eight scheduled meetings each year [9]. - Economic research indicates that a nonpartisan central bank is crucial for maintaining economic stability, despite Trump's push for lower interest rates to stimulate growth [10].

Market Reactions - US stock futures fell, with S&P 500 futures down about 0.7% and Nasdaq futures down 1.0% amid thin trading due to a holiday [2][5] - The dollar weakened against safe-haven currencies, slipping against the Japanese yen and the Swiss franc [2][5] - Gold and silver reached record highs as investors sought safety, while oil prices eased due to concerns over a potential trade dispute impacting global growth [2][5] European Market Sentiment - Major European indices, including EUROSTOXX 50 and Germany's DAX futures, were down 1.1% [2][5] - The European Union condemned the tariff threat from the US, viewing it as economic coercion related to Greenland [3][5] - The EU is considering retaliatory tariffs on €93 billion ($108 billion) worth of US imports, which were previously approved but suspended [3][5] Investment Dynamics - European countries hold approximately $8 trillion in US bonds and equities, nearly double that of the rest of the world combined, which could lead to repatriation of investments [3][5] - Analysts warn that leveraging capital flows could be more disruptive to markets than tariffs alone, given the current negative net international investment position of the US [3][5] Economic Data and Corporate Earnings - Investors are awaiting Chinese economic data, with growth expected to slow to 4.4% in the December quarter from 4.8% previously [3][5] - Delayed data on US core inflation and consumer spending for November is expected to influence Federal Reserve interest rate cut expectations [3][5] - Corporate earnings reports are anticipated from major companies including Netflix, Johnson & Johnson, General Electric, and Intel [3][5] Currency and Commodity Markets - The euro rose 0.1% to $1.1613, while sterling increased to $1.3387; the dollar fell 0.2% against the Swiss franc and 0.3% against the yen [3][5] - Gold prices climbed 1.5% to $4,664 an ounce, while oil prices saw a slight decline, with Brent crude down 0.5% at $63.84 a barrel and US crude off 0.4% at $59.18 [3][5]

Group 1 - The Trump administration is threatening to indict Federal Reserve Chair Jerome Powell over comments regarding a $2.5 billion building renovation project, which Powell described as a "pretext" for the White House's desire to influence interest rate policy [3][5][6] - Powell indicated that the recent threat is not about his congressional testimony or the renovation itself, but rather a consequence of the Federal Reserve's independence in setting interest rates based on public interest rather than presidential preferences [6] Group 2 - President Trump suggested the possibility of blocking Exxon Mobil from investing in Venezuela after the company's CEO labeled the country as "uninvestable" during a recent meeting [4] - The European automotive sector, after two years of underperformance, is showing signs of recovery, with potential for improvement by 2026 according to investment strategist Joachim Klement [5]

Group 1 - Bitcoin's price increased by 2% following Federal Reserve Chair Jerome Powell's commitment to resist pressure from President Trump, who has initiated legal actions against the Fed [1] - Powell described the Justice Department's actions as an unprecedented escalation in the conflict between the White House and the Federal Reserve, emphasizing the central bank's historical independence from presidential influence [2] - Trump's push for aggressive rate cuts contrasts with Powell's cautious stance, raising concerns among investors about the potential threat to the Fed's independence [3] Group 2 - The Federal Reserve recently reduced interest rates to their lowest level in three years, which typically benefits riskier assets like Bitcoin and tech stocks by making bonds less attractive [4] - Despite favorable conditions for stocks and gold, the overall cryptocurrency market has declined by $1 trillion from its peak in October, indicating a lag in crypto performance [5] - The CME FedWatch tool suggests that the Fed is expected to maintain current interest rates in the upcoming Open Market Committee meeting on January 28 [6]

Core Viewpoint - The future of Federal Reserve Chair Jerome Powell after his term ends in May 2026 is uncertain, with speculation surrounding whether he will remain on the board as a governor or leave the Fed entirely [1][5][12]. Group 1: Powell's Decision and Its Implications - Powell's potential departure could shift the balance of power on the Fed's Board of Governors, currently with three Trump appointees out of seven, potentially allowing the president to exert more influence over monetary policy [6][10]. - The Federal Reserve Act may allow the board's majority to dismiss individual bank presidents opposing rate cuts, raising concerns about the independence of the Fed if Powell were to leave [7][10]. - Powell's decision is complicated by the ongoing legal case involving Fed Governor Lisa Cook, which could affect the board's composition and Trump's ability to appoint new members [8][9]. Group 2: Political Context and Speculation - The current political climate is unprecedented, with President Trump openly seeking control over Fed policy, contrasting with past chairs who transitioned quietly to other roles [3][5]. - Powell's reluctance to disclose his future plans may serve as a strategic move to maintain leverage over the administration, signaling his willingness to stay or leave based on the president's nominee choices [11][13]. - Observers believe that Powell is likely to leave when his chairmanship ends, as staying could invite greater political scrutiny and undermine the Fed's independence [12].