The Fed's hawkish voice, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on January 14

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell, with the Dow futures falling 0.32%, the S&P 500 futures falling 0.42%, and the Nasdaq futures falling 0.63%. Germany's DAX index fell 0.41%, Britain's FTSE 100 index rose 0.26%, France's CAC 40 index rose 0.03%, and Europe's Stoxx 50 index fell 0.24%.

2. Interpretation of market news

The Federal Reserve's hawkish voice, the policy dilemma under high inflation and a resilient economy

⑴ Minneapolis Fed President Kashkari defended Federal Reserve Chairman Powell's policy stance. ⑵Kashkari said that interest rates should remain stable this month, suggesting that there is no rush to initiate interest rate cuts. ⑶ He pointed out that if the current monetary policy is really tight enough, we should not see the economy showing such strong resilience. ⑷ Kashkari emphasized that he is cautious about cutting interest rates due to high inflation. ⑸ He added that Trump’s tariff remarks will continue to push up price levels over time. ⑹ When talking about the outlook for interest rates and inflation, Kashkari said that it is entirely possible for the inflation rate to remain well above the central bank's target level in the next two to three years.

OPEC data is released, Russia’s slight decline in production cannot conceal concerns about oversupply

⑴OPEC monthly data shows that Russia’s crude oil production in 2025 fell slightly by about 0.7% to 9.129 million barrels per day. ⑵ Despite facing pressure from Ukrainian drone attacks on energy infrastructure and falling crude oil prices, Russia has basically maintained stable oil production. ⑶Total oil and natural gas revenue is approximatelyAccounting for a quarter of the tax revenue of the Russian Federation budget, the stability of its output is crucial to the finances. ⑷ As a key member of the OPEC+ alliance, Russia agreed to maintain current production levels at a meeting earlier this month. ⑸Oil prices will fall by more than 18% in 2025, the largest annual decline since 2020, mainly due to increasing concerns about oversupply. ⑹OPEC data also showed that Russia's oil production dropped by 73,000 barrels per day in December last year from the previous month to 9.304 million barrels per day. ⑺ During the same period, Kazakhstan's oil production fell by 237,000 barrels per day to 1.522 million barrels per day. ⑻ Data show that Central Asia’s oil production last year rose from 1.539 million barrels per day in 2024 to 1.776 million barrels per day. ⑼ According to industry sources, Kazakhstan’s crude oil and natural gas condensate production plummeted by 35% from January 1 to 12 www.xmtraders.compared with the average level in December, mainly due to restrictions on exports from the Black Sea terminal.

Tightening funding, market undercurrent before the peak settlement of US$29 billion

⑴ The U.S. general collateral repurchase rate opened softly, with the bid price quoted at 3.69%. Since January 6, its trading range has remained within the two basis points range of 3.68% to 3.70%. ⑵ This narrow range fluctuation trend is expected to change tomorrow, as Treasury bill and coupon settlement fund flows will jointly cause a huge liquidity withdrawal of US$29 billion. ⑶ Faced with the pressure to withdraw funds tomorrow, the overnight interest rate is expected to trade in the range of 3.65% to 3.69% before the reverse repurchase operation, and then gradually rise to cope with settlement needs. The ten-day average starting level of 3.73% is the target level. ⑷Today’s reverse repurchase operation was conducted at 1:15 pm New York time, with an interest rate of 3.50%. The recent operation participation and demand scale show that market liquidity is gradually being absorbed. ⑸ The repurchase quotations of spot bonds of various maturities show stable demand, among which the 10-year variety has the largest interest rate spread, which is 29 basis points lower than the general collateral interest rate; as a new 20-year treasury bond issuance will be announced tomorrow, its demand may increase. ⑹ The mortgage-backed securities financing interest rate is 1 basis point higher than the general mortgage interest rate, indicating that there are subtle differences in the financing costs of specific sectors. ⑺Federal funds futures pricing shows that the market expects the probability of the Federal Reserve to cut interest rates by 25 basis points at the January meeting is only 3%, and the probability of the March meeting is 26%. Expectations for interest rate cuts have weakened significantly. ⑻The term repurchase interest rate curve is almost flat, and the 1- to 3-month purchase quotations are concentrated at 3.734% to 3.737%, confirming the market’s conservative pricing of the probability of a recent interest rate cut. ⑼ Short-term overnight index swap pricing implies that the probability of the Federal Reserve cutting interest rates by 25 basis points in the next 90 days is about 33%, which is basically consistent with expectations reflected in the futures market. ⑽ Today’s short-term Treasury bond auction results and SOFR futures contracts opened higher, further reflecting the market’s cautious layout and price adjustments before liquidity events.

As inflation cools and supply tightens, the downward channel for UK bond yields opens

⑴ HSBC analyst Daniela Russell pointed out that as the UKWith national inflation slowing and the supply of government bonds remaining low www.xmtraders.compared to previous years, UK government bond yields are expected to fall further in the near future. ⑵ The current political environment is stable, and market concerns about British public finances have eased after the budget. These factors have supported the performance of national debt. ⑶ However, the development of the global situation and possible political uncertainty in the UK may hinder the decline in government bond yields. ⑷Russell predicts that the ten-year British government bond yield will fall to 3.75% by the end of 2026. ⑸The latest trading data showed that the ten-year British bond yield fell 1 basis point to 4.382%.

Tariff toolbox, five alternative paths in case of judicial obstruction

⑴ If the current tariffs are found to be illegal, the Trump administration can, in accordance with Section 232 of the Trade Expansion Act of 1962, impose additional tariffs on imports from specific industries on the grounds of national security, but it requires an investigation process of up to 270 days by the Department of www.xmtraders.commerce. ⑵ Another option is to invoke Section 201 of the 1974 Trade Act to take action when U.S. industries are threatened by serious damage from imports, but this requires the International Trade www.xmtraders.commission to conduct an investigation and hold hearings for up to 180 days. ⑶ Section 301 of the Trade Act of 1974 can also be used to impose tariffs against foreign discriminatory trade practices, provided that the Office of the United States Trade Representative www.xmtraders.completes an investigation and consults with relevant countries. ⑷Article 122 of the 1974 Trade Act gives the president the power to impose tariffs in response to serious balance of payments problems, with a tax rate ceiling of 15% and a period of no more than 150 days. However, this provision has never been used in history. ⑸The last potential tool is Section 338 of the Smoot-Hawley Tariff Act of 1930, which allows the president to directly impose tariffs of up to 50% on countries that impose unreasonable trade restrictions. There is also no precedent for its use. ⑹ In general, all alternatives are subject to stricter procedures or usage restrictions, and it is difficult to fully replicate the coverage and tax rate levels of the current measures in the short term.

Trump issued a statement on the latest economic data, saying that the tariff policy has achieved significant results

U.S. President Trump: Data released today show that the U.S. trade deficit has dropped to its lowest level since 2009, and is still falling further. Additionally, our nation’s GDP growth is expected to be over 5%, and that’s after experiencing at least a 1.5% loss from the Democratic shutdown. These staggering numbers, along with our nation's unprecedented success, are a direct result of tariff policies that have saved our economy and national security. I hope the Supreme Court understands these historic, existential achievements before delivering their most important (and by far the most important) decision.

The US-Iran military confrontation escalates: The White House is revealed to have obtained a hit list of 50 high-value Iranian targets

The Trump administration has obtained a sophisticated "hit list" of high-value military targets in Iran for the president to use when considering a military strike against Iran. According to the British "Daily Mail" report, the headquarters is located in China.The Washington-based nonprofit United Against Nuclear Iran (UANI) submitted a dossier of 50 targets to White House officials that revealed the precise coordinates of the Talara headquarters of Iran's Revolutionary Guards. The headquarters has been described as the military's nerve center and has operational control over the police force. The list also includes four key division headquarters responsible for operations in different areas of the capital Tehran.

GBP Alert, Crowded Trading and Key Hedging Before the Data Storm

⑴ Morgan Stanley strategists pointed out that the pound may become the first major currency to experience major fluctuations in 2026, and recommended EUR/GBP options as the best hedging tool. ⑵ The bank assesses that in the overall range-bound foreign exchange market, the pound's sensitivity to tactical retracements or rebounds ranks third, second only to the Australian dollar and the Swedish krona. ⑶ Next week’s UK employment data (released on January 20) and CPI data (released on January 21) are key potential catalysts. ⑷Morgan Stanley’s economists’ forecast for employment data is lower than the market consensus and predicts an RPI inflation rate of 3.99%, significantly lower than the current pricing level of 4.23%. ⑸This is in contrast to the market’s pricing of only a 1-2 basis point rate cut at the Bank of England’s February meeting, while Morgan Stanley expects a 25 basis point rate cut. ⑹ Technical analysis also supports the upward trend of EURUSD, with the currency pair trading near the bottom of its recent range, with both RSI and Bollinger Bands issuing oversold signals. ⑺Market positions are extremely crowded, with the GBP/EUR exchange rate at the high 92nd percentile, while volatility appears cheap, with 1-month implied volatility at the 2nd percentile, and the risk reversal indicator has moved lower. ⑻ The agency specifically recommends buying the 1-month parity call spread www.xmtraders.combination of EUR/GBP with an exercise price of 0.8840, with the goal of rebounding to the top of the trend channel under weak data and position squeeze. ⑼The 1x1 spread portfolio can maintain volatility neutrality, but if the Bank of England repricing pushes up volatility, directly buying euro call options may also work. ⑽ Although one-month options can cover data and the Bank of England meeting, data will be the main driver of the foreign exchange market, so choosing shorter-term options can help reduce overall hedging costs.

Eurozone government bond yields fell slightly, and the market focus turned to U.S. data and French politics

⑴ Eurozone government bond yields fell slightly on Wednesday, with investors paying more attention to economic fundamentals rather than concerns about the independence of the Federal Reserve and geopolitics. ⑵ U.S. inflation data for December released on Tuesday were in line with expectations, and investors are now awaiting U.S. retail sales and producer price data to be released later. ⑶The German 10-year government bond yield fell 1.5 basis points to 2.80%. Last week, it recorded the steepest weekly decline since March last year. ⑷ Institutional interest rate strategists said that although U.S. core inflation data was lower than consensus to help limit the rise in yields, today's data may pose a challenge, and its economists expect strong retail sales data to put pressure on U.S. debt and limit gains in German debt. ⑸In terms of market background, the Vice President of the European Central Bank said on Wednesday that geopolitical tensions are giving the euro zoneGrowth prospects are clouded. ⑹ French political risks have returned to the spotlight. National League leader Marina Lepp's appeal will begin on Tuesday, the result of which will determine whether she can participate in the 2027 presidential election. ⑺The yield on French 10-year government bonds fell 1 basis point to 3.52%, and its spread with German bonds was 71 basis points. ⑻ ECB officials said on Wednesday that if France's deficit exceeds 5% in 2026, the country will enter a danger zone. ⑼The yield on Italian 10-year government bonds fell 1.5 basis points to 3.43%, and its spread with German bonds was 62.5 basis points. ⑽The yield difference between the 10-year U.S. and German Treasury bonds was at 135 basis points on Wednesday. ⑾The market is temporarily withdrawing from geopolitical shocks and is instead assessing the relative strength of European and American economic data. French political and fiscal risks are another key variable affecting the internal differentiation of the euro zone.

The dovish Bank of England insists on cutting interest rates, and the market is waiting for next week's data test

⑴ Bank of England monetary policy www.xmtraders.committee member Alan Taylor insists on his familiar dovish tone, predicting that inflation will return to the target level in mid-2026, and therefore advocates that interest rates should be returned to neutral levels faster. ⑵ He set the neutral interest rate level at around 3%; given its voting record (voting in favor of interest rate cuts in 9 of the past 11 meetings), this statement did not add much newness to the central bank’s policy narrative. ⑶ The reaction of the pound exchange rate was muted, and a known dovish member reiterated his dovish tendency, which did not change market expectations, especially when the Monetary Policy www.xmtraders.committee's recent interest rate cut decisions often have narrow differences of 5 to 4. ⑷ Market pricing still favors the central bank not taking action before April, but due to weak domestic data momentum and risks asymmetrically tilted towards further easing, the market expects a dovish signal from the Bank of England. The threshold is very low. ⑸The employment and CPI reports to be released next week (January 20 and 21) will be the first test. If the data are weak enough, it may cause the market to start discussing the possibility of an interest rate cut in February. ⑹ This shows that before the British economic data reaches a clear turning point, it is difficult for the central bank's internal dovish voice to drive the market alone, but weak data may quickly change expectations for the path of interest rates.

Iran’s oil exports have achieved “record growth” in the past 14 months

According to a report by the Islamic Republic of Iran News Agency on the 14th, Iran’s Oil Minister Mohsin Paknejad recently stated that in the past 14 months, Iran’s oil export data based on actual shipments has achieved “record growth”. Paknejad said external pressures such as tariffs and sanctions have not had a material impact on Iran's oil exports. The overall operation of the oil industry is stable, and relevant departments will continue to ensure production and export order and safeguard national economic interests.

Trump spoke out intensively, focusing on domestic and foreign affairs and putting pressure on multiple fronts

⑴ After the release of US inflation data in December, President Trump posted on social media, praising the very low data and once again urging Federal Reserve Chairman Powell to significantly cut interest rates. ⑵ On the Iran issue, Trump stated that he had canceled all meetings with Iranian officials and was conductingDuring the interview, he repeatedly expressed support for the Iranian protesters and warned that the United States would take "very tough actions" if Iran executes the protesters. ⑶According to foreign media reports, Trump attended a meeting on Iran after returning from Detroit and listened to relevant briefings. He said he was aware of possible response measures but had not yet made a decision. ⑷ When speaking at the Detroit Economic Club, Trump praised the rise in stocks and threatened to cause oil prices to fall further. At the same time, he once again criticized Federal Reserve Chairman Powell and urged an interest rate cut. ⑸In his economic speech delivered in Michigan on Tuesday, Trump claimed that his policies had successfully avoided stagflation and achieved "ultra-fast growth" and predicted that he would launch a series of policies to reduce the cost of living. ⑹ When visiting the Ford Motor Factory, Trump showed contempt for the U.S.-Mexico-Canada trade agreement, saying it had "no real benefits" and said the United States "doesn't need goods made in Canada or Mexico." ⑺In response to JPMorgan Chase CEO's criticism that investigating the Federal Reserve Chairman could undermine the central bank's independence, Trump responded by calling the view "wrong" and sticking to his approach. ⑻ Trump accused the governor of Minnesota of condoning financial fraud on social media and said he had instructed Treasury Secretary Bessent to trace the flow of funds. ⑼ Trump also said that he would cut off federal funding support for so-called "sanctuary cities" at the end of this month as part of measures to www.xmtraders.combat fraud. ⑽ These intensive activities show that it is trying to guide the domestic policy agenda and external geopolitical situation through multi-faceted pressure. The market needs to pay attention to its potential far-reaching impact on the independence of the Federal Reserve, trade policy and the situation in Iran.

The EU President reiterated the strong relationship with Greenland, emphasizing Arctic security and NATO ties

⑴ European www.xmtraders.commission President von der Leyen said that Greenland can rely on the EU. ⑵ She pointed out that she is maintaining close contact with Denmark on the Greenland issue and emphasized that the relationship between the EU and Greenland is strong and good. ⑶ Von der Leyen called Arctic security the EU's top priority and said it had increased investment in relations with Greenland. ⑷ She also reiterated the bond principle of "everyone for one and one for everyone" among NATO allies, and made it clear that Greenland is part of NATO. ⑸These statements are aimed at consolidating relations with Greenland and Denmark within the framework of the EU and NATO to cope with potential changes in the geopolitical landscape in the region.

Unrest in Iran has pushed up risk premiums, but increased supply and high inventories have limited oil price gains

⑴ Market analysis points out that currently in a period of geopolitical instability and potential supply disruptions, protests in Iran are regarded as major events that may lead to regime change, and the possibility of a US attack looks high. ⑵ Institutional analysts pointed out in a report that the protests in Iran could tighten the global oil balance through short-term supply losses and rising geopolitical risk premiums, and raised their Brent oil price forecast for the next three months to $70 per barrel. ⑶ However, the agency also pointed out that the protests have not yet spread to major oil-producing areas, so the impact on actual supply is limited. ⑷The rise in oil prices was also restrained by the substantial increase in U.S. crude oil and refined oil inventories. beautifulThe National Petroleum Institute report showed that in the week ended January 9, U.S. crude oil inventories increased by 5.23 million barrels, gasoline inventories increased by 8.23 ​​million barrels, and distillate inventories increased by 4.34 million barrels. ⑸OPEC member Venezuela has begun to reverse production cuts imposed due to the U.S. embargo, and crude oil exports are also recovering, which further limits price increases. ⑹ Two supertankers left Venezuelan waters on Monday, each carrying about 1.8 million barrels of crude oil. They may be the first cargo of a 50 million barrel supply agreement between the two countries. ⑺The market is weighing the dual impact of geopolitical risk premium and weak spot fundamentals, and oil prices may maintain a volatile pattern between optimism and inventory pressure in the short term.

Germany auctioned long-term treasury bonds twice on the same day, with yields and demand diverging

⑴The German Bundesbank conducted two long-term treasury bond auctions on Wednesday, with different results. ⑵ First, Germany auctioned 809 million euros of additional 30-year government bonds with a coupon rate of 0%. The average winning bid yield was 3.45%, and the bidding multiple was 1.5 times. ⑶ Subsequently, Germany auctioned 700 million euros of newly issued 30-year government bonds with a coupon rate of 3.25%. The average winning bid yield was 3.23%, and the bidding multiple was 1.1 times. ⑷ In www.xmtraders.comparison, zero-coupon bonds have a higher issuance yield (3.45% vs. 3.23%) and have stronger market demand (1.5 times vs. 1.1 times). ⑸This differentiation may reflect differences in investor valuations of bonds with different coupon structures, as well as preferences for seeking specific risk exposures on the yield curve, indicating that the market's pricing of long-term bonds is becoming more sophisticated and www.xmtraders.complex.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1648, an increase of 0.05%. The price of (EUR/USD) rose in its last intraday session in the New York session, trying to recover some of the previous losses, trying to unload some clearly oversold conditions on the relative strength indicator, especially with the emergence of positive signals, this performance occurred within the trading range of a bearish correction channel, limiting its previous trading on a short-term basis, and as it traded below the EMA50, negative pressure continues to exist, reducing the chances of achieving a full recovery on a near-term basis.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3442, an increase of 0.15%. Before the New York market opened, GBPUSD was slightly higher on the last trading day in an attempt to recover some of the previous losses and some clear oversold conditions on the relative strength indicator. There were positive overlapping signals in particular as the bearish correction wave dominated on a short-term basis, influenced by the main bullish trendline. Furthermore, as it traded below the EMA50, this reduced the chances of price recovery on a near-term basis.

Spot gold: As of 21:20 Beijing time, spot gold has risen, currently trading at 4629.15, an increase of 0.93%. Gold price (gold) settled on limited gains from its last intraday levels in the New York pre-market, trying to gain bullish momentum that may help it reach a new all-time high. In the short term, the main bullish trend dominates, and despite reaching overbought levels, it is trading along the trend's supporting trend line, with the dynamic support represented by its trading above the EMA50, providing new bullish momentum.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 91.637, an increase of 5.44%. Pre-market in New York, (silver) prices have been trading around last session's levels, trying to gain bullish momentum that could help it resume strong gains and hit new all-time levels in the www.xmtraders.coming period, trying to move some clearly overbought conditions onto the relative strength indicator, especially with the emergence of negative overlapping signals and the persistence of positive pressure as it trades above the EMA50, reinforcing the dominance and stability of the main bullish track on a short-term basis.

Crude oil market: As of 21:20 Beijing time, U.S. oil rose, now trading at 61.690, an increase of 1.25%. Before the New York session, (crude oil) prices rose strongly on the last trading day, breaking the resistance at $61.00, with the main bullish trend dominating in the short term, indicating the strength and dominance of this trajectory, noting the emergence of positive signals from the relative strength indicator, after unloading its overbought conditions, opening the way to the final advance.

4. Institutional perspective

Westpac: The Department of Justice’s investigation of Powell marks an escalation in the government’s pressure on the Federal Reserve

Lucy Ellis, chief economist at Westpac, said that the U.S. Department of Justice’s investigation and potential criminal charges against Fed Chairman Powell marks a new level of government attempts to coerce the Federal Reserve on monetary policy. The former member of the Reserve Bank of Australia's senior management noted that Powell's tough response was both reasonable and expected. Ellis said Powell's broad support showed there were limits to President Trump's ability to bully the central bank. She added that there could be a number of major events in the central bank space in the www.xmtraders.coming weeks.

Mizuho: Japanese investors’ willingness to buy bonds depends on how much the central bank raises interest rates

Evelyn Gomez-Lihti and Shoki Omori, strategists at Mizuho Securities, pointed out that the intensity of Japanese investors purchasing foreign bonds mainly depends on the extent of interest rate hikes by the Bank of Japan. "If market expectations for further interest rate increases increase, domestic investors may continue to reduce their holdings of foreign bonds; conversely, we will see them take a more active stance on overseas assets." Ministry of Finance data shows that in December, most Japanese investor groups were net sellers of overseas long-term bonds, but net buyers of short-term overseas bonds. Mizuho believes the sell-off in long-term bonds reflects "a prudent asset allocation strategy in the context of currency fluctuations, major macro events and the decline in the relative attractiveness of foreign bonds."

The above content is all about "[XM Foreign Exchange]: The hawkish voice of the Federal Reserve, analysis of the short-term trend of spot gold, silver, crude oil, and foreign exchange on January 14". It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

Due to the author's limited ability and time constraints, some contents in the article still need to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: