Daily Market Outlook, January 16, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Risk sentiment was revitalised as markets advanced, alleviating concerns over inflated tech valuations. A chip industry giant reported stellar results, igniting fresh momentum in the ongoing record-breaking rally. Asian markets soared to new highs, climbing 0.5%, driven by TSMC's outstanding earnings, which rekindled investor enthusiasm for the AI boom. The semiconductor leader, alongside a regional tech index, smashed previous records. Meanwhile, Nasdaq 100 futures rose 0.4%, suggesting optimism may extend into U.S. trading. In contrast, European futures pointed towards potential losses, signalling a challenging day ahead. In currency developments, the Yen appreciated 0.2% against the Dollar after Japan's finance minister expressed concerns over its recent depreciation. Oil prices plunged significantly, marking their steepest drop since June, while gold and silver also retreated. Investor confidence in the sustainability of the tech-driven rally continues to grow, with concerns about high valuations and elevated spending largely dismissed. Stocks have rebounded robustly from their April slump, supported by the Federal Reserve's interest rate cuts and heightened excitement over AI-driven profitability. Adding to the positive outlook, the U.S. and Taiwan finalised a long-awaited trade agreement, cutting tariffs on Taiwan's imports to 15%. The deal also paves the way for Taiwan's semiconductor firms to access $500 billion in funding for their U.S. operations—a significant boost for the sector. Elsewhere, U.S. Treasuries held steady during Asian trading hours after an earlier dip, triggered by unexpectedly low unemployment claims reaching their lowest level since November. In crypto developments, Coinbase Global Inc. CEO Brian Armstrong visited the US Capitol on Thursday to reaffirm that his company would continue offering rewards to customers holding stablecoins on its platform. Just a day earlier, Armstrong disrupted progress on long-anticipated digital-asset market structure legislation. His opposition to a draft version, expressed through a social media post, prompted the Senate committee to reconsider its plans to review the proposal on Thursday.

Weighing risks for China’s economy in 2026, weaker year-end credit flow can be dismissed due to seasonal factors tied to growth targets. If the 5% goal is on track, the government may conserve resources for the new year. However, challenges persist: state-driven credit compensates for weak household demand (linked to property issues) and fragile private sector confidence, leaving SOEs to shoulder the load. January data may improve with government action, but domestic demand remains weak despite fiscal support. Excess production relies on exports, which account for a third of annual growth, but rising competition with advanced economies complicates this. Managing trade accusations may require renminbi appreciation, especially if the USD depreciates, with USD/CNH likely to decline further this year.

The Fed’s quiet period ahead of the January 28 decision will have already begun, meaning FOMC views won’t feature at the Davos Forum next week. However, with the ECB meeting just a week later, several Governing Council members, including Christine Lagarde, are scheduled to participate in panel discussions throughout the week. Trump, Bessent, and Rubio's presence on the global stage suggests that US foreign policy will once again dominate the headlines. The next round of central bank meetings begins with Norges Bank on Thursday and the Bank of Japan on Friday, though no changes to policy rates are expected. The week kicks off with China’s Q4 GDP release on Monday and concludes with the January flash PMIs on Friday. In between, the UK will see a particularly packed data schedule, including the labour market report on Tuesday, inflation figures on Wednesday, public finances on Thursday, and retail sales on Friday. In the eurozone, key events include the ECB minutes on Thursday, final December inflation data on Monday, and the ZEW survey in Germany. Meanwhile, the US economic calendar will be relatively light, featuring the third estimate of Q3 GDP and the delayed PCE report for November.

Overnight Headlines

• Japan FinMin Katayama Vows Action On Excessive Yen Moves

• Some BoJ Watchers Signal Earlier Hike Possible As Yen Weakens

• China FX Conversion Hits Record As Firms Rush Back To Yuan

• New Zealand Manufacturing Expands At Fastest Pace In Four Years

• ECB’s Lane: Fed Tensions Could Disrupt Eurozone Rate Path

• Fed Faces ‘Trilemma’ On Optimal Bal Sheet Size Amid Market Volatility

• US, Taiwan Strike Trade Deal Tied To $250B Semiconductor Investment

• OpenAI, Microsoft Lose Final Chance To Avoid Musk Trial

• Trump Weighs Iran Strike As US Sends More Military Assets To Mideast

• Oil Holds Losses After Biggest Drop Since June On Fading Iran Fears

• US Firms Regain Optimism On China After Trump-Xi Trade Truce

• Trump Accepts Machado’s Nobel Prize Amid Venezuela Talks

• France Warns US That Greenland Seizure Threatens EU Trade

• Von Der Leyen Expected To Visit Australia In Feb To Boost Trade Ties

• Monte Dei Paschi CEO Clashes With Billionaire Over Mediobanca Role

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

• EUR/USD: 1.1575-85 (914M), 1.1600 (1BLN), 1.1610 (280M), 1.1620-25 (750M)

• 1.1630-40 (1.2BLN), 1.1660-70 (2.2BLN), 1.1675-85 (2.5BLN), 1.1700 (3.1BLN)

• USD/CHF: 0.7920 (450M), 0.7935-40 (410M), 0.7950 (300M)

• EUR/CHF: 0.9300 (451M), 0.9325 (200M)

• EUR/GBP: 0.8700 (305M), 0.8720-25 (450M)

• GBP/USD: 1.3400 (206M), 1.3415 (420M), 1.3425 (670M), 1.4330-35 (272M)

• AUD/USD: 0.6640-50 (1.7BLN), 0.6685-90 (697M), 0.6700 (362M), 0.6750 (576M)

• NZD/USD: 0.5665 (270M), 0.5800 (220M), 0.5860 (487M)

• USD/JPY: 158.00 (2.1BLN), 158.35 (561M), 158.50 (451M), 158.75 (450M)

• 159.00 (685M). 159.15-25 (1.9BLN), 160.00 (4.7BLN)

CFTC Positions as of January 9th:  

• Speculators have reduced their net short position in CBOT US 5-year Treasury futures by 90,044 contracts, bringing it down to 2,312,753.

• The net short position in CBOT US 10-year Treasury futures has been decreased by 24,106 contracts, resulting in a total of 915,552.

• Speculators have cut their net short position in CBOT US 2-year Treasury futures by 52,953 contracts, now totaling 1,346,654.

• There has been a reduction of 9,392 contracts in CBOT US UltraBond Treasury futures, resulting in a net short position of 245,747.

• Speculators switched their position in CBOT US Treasury bonds to a net short of 6,832 contracts, compared to 14,222 net long contracts the previous week.

• The net short position in Bitcoin stands at 734 contracts.

• The Swiss franc reflects a net short position of 40,266 contracts.

• The British pound has a net short position of 30,538 contracts.

• The Euro has a net long position of 162,812 contracts.

• The Japanese yen holds a net long position of 8,815 contracts.

Technical & Trade Views

SP500

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 6890 Target 7040

• Below 6860 Target 6820

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.1710 Target 1.1780

• Below 1.1685 Target 1.1580

GBPUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 1.3490 Target 1.36

• Below 1.3390 Target 1.3290

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 157.40 Target 160

• Below 157 Target 155

XAUUSD

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 4500 Target 4687

• Below 4460 Target 4380

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 91.8k Target 98.17k

• Below 91.2k Target 88.7k