Synopsis
Asian currencies strengthened as the dollar weakened to a four-year low, driven by investor caution over the unpredictability of U.S. policy. The dollar’s decline accelerated after President Trump expressed indifference to its fall, fueling speculation about a coordinated intervention. This comes ahead of the Fed’s interest rate decision and a crucial week for mega-cap tech profits.
TIL CreationsAlphabet Inc., by far the best performer among megacaps last year, will release its report on February 4. Amazon.com Inc.’s results will arrive on February 5 and Nvidia Corp.’s results will arrive on February 5. on February 25.
Asian currencies advanced as the dollar fell to levels last seen four years ago as investors grew cautious about the world’s reserve currency amid unpredictable policy from Washington.
The Malaysian ringgit, Thai baht and South Korean won all appreciated in early Asian trading after the Bloomberg Dollar Spot Index fell to its lowest level since February 2022 during the US session. The dollar stabilized after its biggest decline since April. The greenback’s decline accelerated after President Donald Trump said he was not concerned about the weakening.
Asian stocks were mixed, with South Korea rising and Japan falling. U.S. stock index futures extended gains as the Wall Street Journal reported that SoftBank was in talks to invest up to $30 billion more in OpenAI.
The dollar’s weakness reflects uncertainty over the Trump administration’s policies, including threats to seize Greenland and comments that raised concerns about the independence of the Federal Reserve. It is in this context that the Fed announces its decision on interest rates on Wednesday, just as traders turn their attention to megacap technology profits.
“The Trump administration is taking a calculated risk,” said Win Thin, chief economist at Bank of Nassau 1982 Ltd. “Foreign exchange is usually the first to show market discomfort with a country’s policies and economic outlook, so this dollar weakness is worth watching.”
The dollar’s latest decline also follows signs of U.S. support to boost the yen, reopening speculation on the possibility of coordinated currency intervention to guide the greenback lower against its major trading partners.
Trader reports said Friday that the New York Federal Reserve had contacted financial institutions to check the yen exchange rate – a preliminary step often taken before intervention.
At the same time, Trump’s comments on the dollar came on top of an earlier decline in the greenback, which reflected a lack of confidence in the U.S. economy, partly due to his erratic tariff policy.
Speaking to reporters in Iowa, Trump said “the dollar is doing well.” Asked if he would like to see the currency fall further, he said he could move it up or down “like a yo-yo.”
In other parts of the market, gold traded slightly below its all-time high and silver advanced. West Texas Intermediate crude also rose slightly. Products are all valued in dollars.
Treasuries were a bit stronger, with the 10-year yield falling a basis point to 4.23% ahead of Wednesday’s Fed meeting. The central bank is expected to end its cycle of rate cuts as a more stable jobs market restores some consensus among officials after months of growing division.
With the economy still showing exceptional strength, the Fed’s message will likely emphasize a data-driven approach to future policy decisions, according to SWBC’s Chris Brigati. Additionally, the tone of this week’s results from the so-called “Magnificent Seven” technology companies should be strong.
About a third of S&P 500 companies by market capitalization report earnings this week. Microsoft Corp., Meta Platforms Inc. and Tesla Inc. will report results on Wednesday, followed by Apple Inc. on Thursday. Alphabet Inc., by far the best performer among megacaps last year, will release its report on February 4. Amazon.com Inc.’s results will arrive on February 5 and Nvidia Corp.’s results will arrive on February 5. on February 25.
“This week is crucial in setting the short-term tone for the market as 2026 progresses,” Brigati noted. “History shows that a strong January often determines the rest of the year, with investor psychology playing an outsized role. »
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