Economic Indicators - The dollar index (DXY00) is down by -0.02%, reflecting concerns over potential tariffs imposed by President Trump on several European countries if they do not allow the acquisition of Greenland [1] - US pending home sales in December fell by -9.3% month-over-month, marking the largest decline in 5.5 years, significantly worse than the expected -0.3% [2] - US construction spending in October rose by +0.5% month-over-month, exceeding expectations of +0.1% [3] Monetary Policy and Market Reactions - The Federal Open Market Committee (FOMC) is expected to cut interest rates by about -50 basis points in 2026, contributing to underlying weakness in the dollar [5] - The dollar is under pressure as the Fed has begun purchasing $40 billion a month in T-bills since mid-December, increasing liquidity in the financial system [6] - Markets are currently pricing in a 5% chance of a -25 basis point rate cut at the FOMC's next meeting on January 27-28 [4] Political Developments - President Trump announced a 10% tariff on goods from eight European countries starting February 1, which will rise to 25% in June unless a deal for the "purchase of Greenland" is reached [4] - President Trump stated he is seeking "immediate negotiations" to acquire Greenland, emphasizing that he does not want to use excessive force [3][6] - The euro (EUR/USD) is down by -0.10% today, with its losses limited by the dollar's weakness and supportive comments from ECB President Lagarde regarding the minor impact of additional tariffs on European inflation [7]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) reached a new 2.75-month low but later recovered, indicating ongoing weakness despite a stronger-than-expected US GDP report of +4.3% [1] - US weekly initial unemployment claims decreased by -10,000 to 214,000, showing a stronger labor market than the expected 224,000, while continuing claims rose by +38,000 to 1.923 million, indicating a weaker labor market than the expected 1.900 million [2] Group 2: Central Bank Policies - The People's Bank of China (PBOC) issued a cautious statement focusing on long-term stability, indicating no sudden interest rate cuts to address issues like property market weakness and weak domestic demand [3] - The Federal Reserve (Fed) is expected to cut interest rates by about -50 bp in 2026, while the Bank of Japan (BOJ) is expected to raise rates by +25 bp in the same year, and the European Central Bank (ECB) is expected to keep rates unchanged [4] Group 3: Dollar Pressure Factors - The dollar is under pressure as the Fed increases liquidity by purchasing $40 billion a month in T-bills, and concerns arise over President Trump's potential appointment of a dovish Fed Chair, which could negatively impact the dollar [5] - The euro (EUR/USD) is down -0.14%, but has received support from ECB member comments expressing satisfaction with the current outlook for no interest rate cuts [6]

Group 1 - The Federal Reserve plans to start purchasing short-term US Treasury bills on December 12, totaling around $40 billion a month, to boost liquidity in markets and the banking sector [2][5] - The Fed's reserve balances currently stand at approximately $2.8 trillion, indicating a significant reliance on central bank support [3][5] - Michael Burry views the Fed's actions as a sign of systemic weakness in the US banking system, suggesting that the banks are becoming increasingly fragile [4][6] Group 2 - The purchase of short-term Treasurys marks the first meaningful expansion of the Fed's balance sheet since the end of its quantitative easing program in 2022 [6] - Burry expresses concern that the need for over $3 trillion in reserves from the Fed indicates a lack of strength in the banking system [5][6] - Following the Fed's announcement, stock markets surged, driven by optimism regarding the central bank's plans [5]